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Nov. 12, 2019, 3:14 p.m. EST

Oil tallies back-to-back declines, finding little guidance on U.S.-China trade developments

Market awaits holiday-delayed weekly EIA U.S. supply data Thursday

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By Myra P. Saefong and Mark DeCambre, MarketWatch


Bloomberg
Oil prices finish with a modest loss on Tuesday

Oil futures ended slightly lower on Tuesday, to post back-to-back declines, as a speech from President Donald Trump failed to offer any market-moving insights related to progress on trade talks between China and the U.S., a driver of economic growth and demand for crude.

For now, the oil market is “becoming largely range bound, perhaps waiting for an indication around tariffs or starting to think about the delayed inventory data,” said Marshall Steeves, energy markets analyst at IHS Markit.

West Texas Intermediate crude for December delivery, the U.S. benchmark, lost 6 cents, or 0.1%, to settle at $56.80 a barrel on the New York Mercantile Exchange, after losing 0.7% on Monday, while January Brent crude shed 12 cents, or 0.2%, to $62.06 a barrel on ICE Futures Europe, following a 0.5% skid for the international benchmark grade on Monday.

During a speech at the Economic Club of New York Tuesday, Trump threatened to “substantially” raise tariffs on China if a deal between Beijing and Washington D.C. isn’t reached.

He also said a U.S.-China trade deal “could happen soon,” and that a phase one agreement was “close, but wasn’t specific about when the nations may sign an agreement. Reuters reported before the speech that the U.S. president was expected to push back the date when he would decide on whether to place tariffs on cars and auto part imports from the European Union, citing European officials.

International trade tensions between the U.S., China and Europe have been a big headwind for oil prices as Trump’s import tariffs have contributed to slowing economic growth this year while supplies have been rising.

WTI oil prices had touched an intraday high of $57.55 during Tuesday’s session. News reports said data provider Genscape reported that crude-oil inventories at key oil delivery point Cushing, Okla. were down 1.2 million barrels in the week to Nov. 8.

Investors will be watching for U.S. petroleum supply reports from the American Petroleum Institute due at 1:30 p.m. on Wednesday and the more closely followed Energy Information Administration report at 11 a.m. on Thursday, with both coming a day later than usual due to the U.S. Veterans Day holiday observed on Monday.

Last week, EIA reported that U.S. crude supplies rose a second straight week, up 7.9 million barrels for the week ended Nov. 1.

IHS Markit projections for the EIA data call for an increase of 1.1 million barrels for crude inventories for the week ended Nov. 8, along with declines of 1 million barrels for gasoline and 500,000 barrels for distillate supplies.

In addition to weekly supply data, a monthly report from the Organization of the Petroleum Exporting Countries is due on Thursday and the monthly International Energy Agency report is due on Friday, before a key Dec. 5-6 meeting of OPEC and major allies, including Russia, where potential for deeper production cuts will be discussed.

Meanwhile, news reports over the weekend said that Iran President Hassan Rouhani announced the discovery of a new oil field that contains 53 billion barrels of crude oil, which would raise Iran’s proven reserves by about a third.

Steeves said the discovery “could be an impactful event in due course if, firstly, Iran can bring that oil to market both in terms of getting it out of the ground and exporting it in light of current U.S. sanctions.”

For now, “the U.S. sanctions are a barrier to Iran’s ability to do anything with this find. Maybe further down the road that could change,” he told MarketWatch.

Back on Nymex, December gasoline  added 0.3% to $1.6144 a gallon, while December heating oil  shed 0.9% to $1.8976 a gallon.

December natural gas  settled at $2.621 per million British thermal units, down 0.6%.

Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong. Mark DeCambre is MarketWatch's markets editor. He is based in New York. Follow him on Twitter @mdecambre.

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