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Oil falls as U.S. rights bill fuels tensions with China

Oil&Gas Materials 28 November 2019 13:38 (UTC +04:00)
Oil prices fell for a second day on Thursday after official data showed U.S. crude and gasoline stocks rose
Oil falls as U.S. rights bill fuels tensions with China

Oil prices fell for a second day on Thursday after official data showed U.S. crude and gasoline stocks rose and President Donald Trump signed into law a bill backing protesters in Hong Kong, fuelling tensions with China, Trend with reference to Reuters reports.

Brent crude was down 19 cents, or 0.3%, at $63.87 a barrel by 0854 GMT, having dropped 0.3% on Wednesday.

West Texas Intermediate crude fell 33 cents, or 0.6%, to $57.78, after losing 0.5% in the previous session.

China warned the United States that it would take “firm countermeasures” in response to U.S. legislation backing anti-government protesters in Hong Kong.

Investors are concerned that the move might delay further a preliminary agreement between the United States and China to put an end to their trade war that has slowed global economic growth, and consequently consumption of oil.

“The approval of the Hong Kong legislation backing protesters is likely to put the trade agreement into question as China has reiterated its threat of retaliation,” said Hussein Sayed, chief market strategist at FXTM.

“If investors suspect that the trade agreement is under real danger, expect to see a sharp sell-off in December. For now, investors are taking a wait-and-see approach.”

Crude stockpiles in the United States swelled by 1.6 million barrels last week as production rose to a record 12.9 million barrels per day (bpd) and refinery runs slowed, the Energy Information Administration said. Analysts in a Reuters poll had forecast a drop of 418,000 barrels.

Investors have also been focusing on next week’s meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, which have been withholding production to support prices.

“We expect OPEC+ to roll over its current production-cut deal, which is set to expire at the end of March, by three to six months,” UBS oil analyst Giovanni Staunovo said.

“The upshot is that deeper cuts by the entire membership are unlikely.”

Reuters reported that Russia may call on OPEC+ to exclude condensate - a high-premium light oil mainly extracted during gas production - from its crude oil production numbers.

Russian Energy Minister Alexander Novak said on Thursday there was no decision yet on this issue. “We are holding discussions, making calculations,” Novak told reporters.

In the United States, energy services company Baker Hughes reported that the country’s oil drillers reduced the number of drilling rigs for a record 12th month in a row.

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