FXEMPIRE
All
Ad
Corona Virus
Stay Safe, FollowGuidance
World
21,100,485Confirmed
758,001Deaths
13,948,929Recovered
Fetching Location Data…
Advertisement
Advertisement
James Hyerczyk
WTI and Brent Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading sharply lower for a second session on Tuesday amid fresh worries over limited progress in the trade talks between the United States and China. Meanwhile, renewed concerns over rising U.S. oil supply also encouraged speculative longs to book profits after last week’s solid gains.

At 10:16 GMT, January WTI crude oil is trading $56.69, down $0.45 or -0.81% and January Brent crude oil is at $62.03, down $0.41 or -0.62%.

The lack of follow-through to the upside, following Friday’s strong close was the first sign of weakness on Monday. However, the trigger for the steep intraday break was a report that suggested U.S.-China trade talks had hit another snag.

Prices broke sharply after CNBC’s Eunice Yoon reported, citing a government source, that Chinese officials are pessimistic about the prospect of a U.S.-China trade deal. China is troubled by President Donald Trump saying recently the U.S. would not roll back tariffs as they thought both sides had agreed to do so in principle, Yoon reported.

Daily Forecast

The early weakness on Tuesday suggests that crude oil traders are being largely influenced by worries over slower global demand growth and rising U.S. stockpiles.

Although the U.S. equity markets continue to rally on the hopes of a trade deal, crude oil traders feel that the longer the process of reaching an agreement is drawn out, the more negative the demand picture becomes.

Essentially, there is a conflict between speculative buyers, who want to add to long positions on the hope of a trade deal, and bearish traders who are worried over demand. This is adding to the volatility. Based on this assessment and the price action over the past two weeks, we won’t be surprised if there is another reversal to the upside.

Not only are traders worried about a trade deal and the demand outlook, but there is also uncertainty over whether OPEC and its allies will deepen production cuts at its December 5-6 meeting.

Later today at 21:30 GMT, investors will get the opportunity to react to weekly inventories data from the American Petroleum Institute (API). The API report is expected to show U.S. crude oil stockpiles had risen for a fourth straight week.

Advertisement
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All

Trade With A Regulated Broker

  • Your capital is at risk