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James Hyerczyk
Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading mixed on Tuesday after failing to follow-through to the upside following a strong two-day short-covering rally. Earlier in the session, the markets edged higher in response to a jump in industrial commodities and supply disruption concerns in Iraq and Ecuador. However, renewed concerns over U.S.-China trade relations helped erase those gains and turn the markets lower.

At 09:35 GMT, November WTI crude oil is trading $52.66, down $0.08 or -0.11%. December Brent crude oil is at $58.43, up $0.08 or +0.14%.

Traders are saying a surge in industrial metals, copper and aluminum, in London helped underpin crude oil on the notion the market was oversold in response to last week’s reports on weakening manufacturing activity.

The markets were also underpinned for a second session early Tuesday as protests in Iraq and Ecuador over poor economic conditions threatened to disrupt output from a couple of OPEC members.

According to CNBC, “The death toll has climbed after a week of unrest in Baghdad, capital of the second-largest OPEC producer.

“In Ecuador, protests against austerity measures could reduce the Andean producer’s crude output by 59,450 barrels per day,” the country’s energy ministry said late on Monday.

Helping to generate a bearish tone in the markets are worries over the U.S.-China trade talks, which are set to begin on October 10, after the U.S. expanded its trade blacklist against China. The decision appeared likely to draw a sharp response from Beijing, with investors worried it might harm the chances of a breakthrough later this week.

Additionally, President Donald Trump has said the tariff increase will take effect if no progress is made in bilateral trade negotiations.

In other news, Reuters is reporting that Russia, the world’s second-largest oil producer said it could increase production rather quickly if Saudi Arabia’s production problems were to last longer than expected, according to Russian Energy Minister Alexander Novak.

Daily Forecast

Early in the session, all eyes will be on U.S.-China trade relations. Traders continue to level out positions ahead of the meeting in an effort to reduce risk. This may have been the reason behind the two-day short-covering rally.

Late in the session at 20:30 GMT, traders will get the opportunity to react to the American Petroleum Institute’s weekly inventories report. Traders are looking for a rise of 1.8 million barrels for the week-ending October 4. This will be the four straight week of increases. However, distillate and gasoline stocks are expected to fall.

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