Oil prices fell on Monday as an uptick in USA drilling and concerns about demand due to the slow progress in U.S. -Chinese trade talks overshadowed support from OPEC-led supply restraint.
An oil pump jack pumps oil in a field near Calgary, Alberta, Canada on July 21, 2014.
Due to tighter supply of medium and heavy sour crude oil, Middle Eastern benchmarks for sour crude grades have been trading higher than Brent Crude prices since the beginning of February in a rarely seen development in global oil prices.
"Oil prices are still trying to figure out what lead to follow".
"At the same time, it has to be argued that a lot of the economic data that has been released over the last few days has really not been too encouraging, and U.S". Traders are saying that the pressure is being fueled by worries over increasing US production after a report on Friday showed an increase in drilling activity in the United States.
WTI (oil futures on NYMEX) kicked-off the week on a negative note and remained on the back foot, as the sentiment was dented by a rise in the USA rigs count while a shutdown of a large crude distillation unit in the U.S. state of IL fuelled crude demand concerns. On March 1, 2019 the current 10% tariff on Chinese imports already imposed will increase to 25% on trade worth approximately $200 billion.
Trade talks between the United States and China resumed with working level discussions before high-level discussions later in the week. China has already said that it will retaliate if this increased tariff is imposed, leading to the USA saying tat it will impose duties on another $267 billion of Chinese imports.
Prices have been buoyed, however, by output curbs from the Organization of the Petroleum Exporting Countries and its allies, including Russian Federation, a group known as OPEC+.
The deal, effective from January, aims to cut 1.2 million barrels per day until the end of June to forestall a supply overhang. OPEC and its allies will meet on April 17 and 18 in Vienna to review the pact.
US sanctions on Venezuela, along with older sanctions on fellow OPEC member Iran, have also prevented crude prices from falling further.