Oil futures were under pressure Tuesday, posting a loss for a second session in a row, as a lower economic growth forecast from the International Monetary Fund and a recent round of weak data out of China fueled worries over energy demand.
“There is more concern about a slowing global economy, with weak import and export data out of China, which one might think would make China want to get done with the so-called phase one of this complex U.S.-China deal,” said Phil Flynn, senior analyst at Price Futures Group, in a note. “Instead more talks seem to be the talk, and oil took another hard drop...”
West Texas Intermediate crude for November delivery on the New York Mercantile Exchange fell 78 cents, or 1.5%, to settle at $52.81 a barrel, while December Brent crude lost 61 cents, or 1%, to end at $58.74 a barrel on ICE Futures Europe. Both crude benchmarks settled around 2% lower Monday.
Analysts said oil prices finished off the session’s worst levels after some positive noises out of Beijing on the proposed trade deal with China announced last Friday. China’s foreign ministry spokesman said China and the U.S. are “on the same page and have no difference in the stance on reaching a trade deal.”
Oil prices fell Monday as doubts emerged over the trade agreement touted by President Donald Trump at the end of last week due to a lack of detail and after reports China wanted further talks before completing the agreement.
Analysts said upside on trade optimism may be limited barring further movement on U.S.-China import tariffs which have been blamed for slowing global economic growth and lowering oil demand.
“U.S.-China discussions seem to have made some progress, and the prospect of a genuine truce has risen. But unless there’s a shift to unwind existing tariffs and lifting of the U.S. export ban on Huawei, there’s little reason to start popping the champagne corks just yet,” said Stephen Innes, market strategist at AxiTrader, in a note. “And of course, it’s far too early to begin pricing in a global growth recovery although that optionality is cheap as chips.”
The IMF on Tuesday said it sees global economic growth falling to a 3% rate this year, the slowest pace since the 2008 financial crisis.
In other energy trading, November gasoline tacked on almost 0.1% at $1.6144 a gallon, while November heating oil shed 0.3% to $1.91 a gallon.
November natural-gas futures rose 2.6% to $2.339 per million British thermal units.
Weekly U.S. petroleum supply data will be delayed by a day this week because of Monday’s Columbus Day federal holiday. The American Petroleum Institute will release its report Wednesday, with official data from the Energy Information Administration due out Thursday, after the EIA’s weekly natural-gas supply figures. The EIA has reported weekly increases in crude stockpiles for four weeks in a row.