Oil’s rally stuttered as uncertainty over the status of trade negotiations between the U.S. and China stoked concerns over global economic growth.
Futures for May fell as much as 1.2 percent in New York. China was said to be pushing back against American demands, raising speculation that trade tensions between the world’s biggest economies will persist. Still, the price drop was cushioned by an American Petroleum Institute report that was said to show U.S. crude stockpiles declined ahead of government data due Wednesday.
Crude has surged almost 30 percent this year on Saudi Arabia-led output cuts by the OPEC+ coalition that seeks to avert a global glut, and as American sanctions have squeezed supplies from Venezuela and Iran. Meanwhile, a measure of oil volatility gained this week after Russia pressured the producer group to delay extending its curbs at a time when hopes are dimming over a trade deal between the U.S. and China.
“The feel-good factor was dealt a blow yesterday in the form of resurfacing trade jitters,” Stephen Brennock, an analyst at PVM Oil Associates Ltd., wrote in a report. “Those putting their betting chips on an imminent price surge will also be eyeing a further downswing in U.S. petroleum stockpiles.”
West Texas Intermediate for May delivery traded 45 cents lower at $58.84 a barrel on the New York Mercantile Exchange by 11:38 a.m. London time. It fell earlier as much as 1.2 percent to $58.56. The April contract, which expires Wednesday, declined 43 cents to $58.60.
Brent for May settlement dropped 10 cents to $67.51 a barrel on the London-based ICE Futures Europe exchange. The contract added 7 cents to $67.61 on Tuesday. The global benchmark crude traded at an $8.68 premium to WTI for the same month.
Trade Talks
Some U.S. negotiators are worrying that Chinese officials have shifted their stance as they haven’t received assurances from President Donald Trump’s administration that tariffs imposed on their exports would be lifted after agreeing to changes to their intellectual-property policies, according to people familiar with the negotiations.
In a continuation of efforts to hammer out a deal, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to Beijing the week of March 25 for high-level talks, said a senior administration official who asked not to be identified.
Meanwhile, nationwide crude inventories in the U.S. decreased by more than 2 million barrels last week, industry-funded API was said to report. If confirmed by the Energy Information Administration’s data Wednesday, it would be the second week of declines. However, the median forecast in a Bloomberg survey of analysts signals an increase of 1.75 million barrels.
