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Oil Falls as Trump Signals Long Wait for U.S.-China Trade Deal


By Heesu Lee and Alex Longley

(Bloomberg) Oil slipped below $56 as U.S. President Donald Trump said there may be a long wait for a trade agreement with China, casting doubt about the strength of demand just days before the OPEC+ meeting.Futures fell 0.6% in New York, erasing earlier gains. Trump said he was willing to wait another year to sign a trade deal with China. The Organization of Petroleum Exporting Countries and its allies, who will gather in Vienna in the coming days, are poised for a debate about some nations’ lax implementation of production cuts.

Oil fell as the U.S. president said a deal with China could take a year

Crude has climbed since early October on signs the U.S. and China were edging closer to an initial trade deal. Without a resolution to the standoff, concerns about the strength of global oil demand next year may return. OPEC+ has signaled it’ll stick with its existing production deal, but Iraq said on Sunday that the group may consider deepening output cuts.

“The global oil supply-demand balance requires an extension of the current OPEC+ cuts,” Goldman Sachs Group Inc. analysts including Damien Courvalin wrote in a report. “Already large speculative buying in recent weeks and some expectations for a longer/larger cut suggests that an uneventful three-month extension is unlikely to provide much upside to current prices.”

West Texas Intermediate for January delivery fell 31 cents to $55.65 a barrel on the New York Mercantile Exchange as of 7:58 a.m. New York time. Brent for February settlement dropped by 31 cents to $60.61 on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $4.98 premium to WTI for the same month.

Read our OPEC+ Reality Check: Deal Extension Likely, Compliance in Focus

OPEC’s production dropped last month led by Angola, whose output fell to the lowest in more than a decade. Iranian volumes, already squeezed to the lowest since the 1980s by U.S. sanctions, dwindled even further.

Other oil-market news:
  • Russia will propose that OPEC+ accounts for condensate production when judging compliance with output targets, Energy Minister Alexander Novak told reporters in Moscow.
  • Saudi Arabia raised the relative premiums for its lighter crude grades in January as new rules governing the sulfur content of ship fuels come into force.
  • Kuwait’s government will invest as much as $1 billion in Aramco’s initial public offering as Saudi Arabia asks regional allies to bolster the record share sale, people familiar with the matter said.


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