Oil prices dropped for a second straight session as the negatives of a slowing global demand vision outweighed the positives of OPEC’s deal. This is at the end of last week to deepen output declines in early 2020.
Brent futures settled down 14 cents, or 0.2%, at $64.11 per barrel. West Texas Intermediate oil futures fell 13 cents, or 0.2%, lower to $58.89 a barrel. The benchmarks dropped by 0.2% and 0.3% respectively on Monday.
Data showed exports from China in November slipped 1.1% from a year earlier, confusing expectations for a 1% increase in a poll.
The Washington and Beijing trade war caused the weakness amid new fronts that hinder global economic growth coming up fast. Washington’s next set of tariffs against some $156 billion Chinese products scheduled to take effect on Dec. 15.
According to U.S. Agricultural Secretary, U.S. President Donald Trump does not want to implement the next round of tariffs. Contrarily, President Trump wants a movement from China to avoid them.
Analysts said although overshadowed, the move by OPEC+, including Russia, to deepen output cuts from 1.2 million bpd to 1.7 million bpd would remain a mid-term support factor.
Non-OPEC production threatens to counteract efforts to limit global crude supplies.
The director of global energy and natural resources at Eurasia said despite the voluntary restraint from OPEC, world oil markets remain well-supplied. Non-OPEC production expected to increase over 2 million bpd next year, with significant increases in the U.S., Brazil, and Norway.
Moreover, U.S. crude oil output recently hit a record of 13 million bpd and expected to increase further in 2020.
A market analyst at CMC Markets said oil prices are possible to be more data-driven and move in tandem with demand news.
Oil Fell on China Worries; OPEC Deal Still Haunting
Markets may wait for the rest of the week for a possible China-U.S. deal. Contrarily, weak Chinese export data are giving shareholders an ominous feeling, sending oil prices lower on Monday.
Crude futures decreased nearly from start to close in New York, not gaining any idea from Friday’s outperformance. The U.S. oil benchmark increased more than 7% on the week on broad output cuts promised by world oil producers.
U.S. West Texas Intermediate crude decreased by 18 cents, or 0.3%, at $59.02 per barrel. It hit a five-month high of $59.84 on Friday, cents away from the $60 level much sought by oil bulls.
The U.K. Brent closed New York trading decreased by 14 cents, or 0.2%, at $64.25. It reached a three-month peak of $64.88 on Friday.
Saudi Arabia, Russia, and other oil companies grouped under the OPEC+ alliance agreed in Vienna to decrease daily output by an average of 2.1 million barrels.
Still, oil prices dropped after data showed Chinese exports reduced for a fourth-straight month. It sent anxiety through a market concerned about damage to global demand by the trade war between Washington and Beijing.
Customs data showed exports from China in November decreased by 1.1% from a year earlier. Senior market analyst at OANDA said China is not invulnerable to either the U.S. trade tariffs or the lingering slowdown in the wider global economy.
PetroMatrix said the net impact on actual supplies will be limited and depends on Iraq, making sharp cuts to its output. Iraq has been OPEC’s most deviant member of output accords.
OPEC will release its monthly oil report, followed by the significant IEA repost on global supply-demand.