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James Hyerczyk
Crude Oil

U.S West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Tuesday, rebounding from early session weakness caused by uncertainty over the progress of U.S.-China trade talks and new concerns about over supply. The turnaround in the market may have been fueled by optimism ahead of a speech by President Trump to the Economic Club of New York.

At 11:04 GMT, December WTI crude oil is trading $57.22, up $0.36 or +0.63% and January Brent crude oil is at $62.64, up $0.46 or +0.74%.

Trade Deal Worries Weigh on Demand

CNBC said worries about the impact on oil demand from the fallout of the 16-month U.S.-China trade war, which has weighed on global economic growth, have returned after doubts were cast on the chances of a so-called phase one agreement.

U.S. President Donald Trump said on Saturday that talks with China were moving along “very nicely” but the United States would only make a deal if it was the right one for Washington. He also said there had been incorrect reporting about U.S. willingness to rollback tariffs.

Last week, traders were concerned about when and where a trade deal would be signed after Chile canceled a world trade conference, and the U.S. and China couldn’t agree on a trade signing venue, pushing a potential deal into December. However, it’s been over a week since a signing date has even mentioned. This is leading some investors to believe the deal may not be signed until early 2020.

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Renewed Supply Side Worries

Saudi Arabia raised its oil output in October to 10.3 million barrels per day (bpd), although it kept its supplies to oil markets below its OPEC output target.

In another potentially bearish development, OPEC and its allies will probably extend a deal to limit crude supply but are unlikely to deepen their cuts, Oman’s energy minister said.

Daily Forecast

Traders will be keeping an eye on any fresh trade deal developments since this could trigger a volatile reaction in the market.

There will be no American Petroleum Institute (API) supply report on Tuesday due to Monday’s U.S. Federal holiday. The report will be released on Wednesday with the U.S. Energy Information Administration (EIA) issuing its supply numbers on Thursday.

On Monday, U.S. data showed that crude inventories at the Cushing, Oklahoma delivery hub for WTI, fell about 1.2 million barrels in the week-ending November 8, traders said, citing market intelligence firm Genscape.

This is an important development because Cushing inventories had grown for five weeks in a row through November 1, according to government data.

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