Oil Steady Near 12-Week High Amid Stockpile Drop, Trade Anxiety
December 10, 2019 EnergyNow Media
By Sharon Cho and Grant Smith
(Bloomberg)Oil was steady near a 12-week high in New York, supported by signs of falling American crude inventories yet capped by continuing salvos in the U.S.-China trade dispute.West Texas Intermediate futures were little changed. U.S. crude stockpiles fell by 2.5 million barrels last week, a Bloomberg survey showed before government data due Wednesday. The White House is scheduled to put tariffs on a further $160 billion of Chinese goods Sunday, although Agriculture Secretary Sonny Perdue said they’re unlikely to be implemented. Chinese officials also expect the higher levies will be postponed, according to people familiar with the matter.
Oil closed at the highest level since mid-September on Friday after the Organization of Petroleum Exporting Countries and its allies surprised the market with deeper-than-expected output cuts. Attention has now turned back to the prolonged U.S.-China trade war and whether the two sides can nail down a much-hyped phase-one agreement.
“It is the uncertainty triggered by the trade tension that hindered risky assets gaining further ground,” said Tamas Varga, an analyst at PVM Oil Associates Ltd.
WTI for January delivery fell 11 cents to $58.91 a barrel on the New York Mercantile Exchange as of 8:43 a.m. local time. The contract closed 18 cents lower on Monday after jumping 7.3% last week.
Brent for February settlement declined 10 cents to $64.15 a barrel on the London-based ICE Futures Europe Exchange after slipping 0.2% on Monday. The global benchmark crude traded at a $5.31 premium to WTI for the same month.
See also: WTI Oil Options Volatility Slumps as Futures Drift Higher
It would be the second straight weekly drop in U.S. stockpiles if the Bloomberg survey is confirmed by Energy Information Administration data. Still, inventories are near the highest since mid-July after rising in 10 of the 11 weeks through Nov. 22.
Other oil-market news:
Saudi Arabia isn’t counting on much of an uplift from crude prices in 2020. The kingdom has designed next year’s budget under the assumption Brent will average about $65 a barrel, according to calculations by Ziad Daoud, Bloomberg’s chief economist in the Middle East.
The plunge in profits from turning crude into fuels is overdone and refining margins will likely recover as demand for diesel picks up due to the introduction of new ship-fuel rules, according to Morgan Stanley.
Enbridge Inc. is joining Enterprise Products Partners LP’s effort to build a crude terminal off the Texas coast, giving the project a leg up in the race to serve America’s growing export market.
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