Oil prices edged lower on Thursday, weighed by the recent US crude supply data, amid optimism about trade negotiations at the upcoming meeting of leaders of the Group of 20 nations (G20) being able to support global economy and increase demand.
US West Texas Intermediate (WTI) crude futures for January delivery were down 0.8 percent to $49.86 per barrel. WTI closed the previous session with a 2.5 percent loss to fall at $50.29 a barrel, after hitting its lowest level since early October 2017.
February contract Brent crude oil futures dropped 1.4 percent to $58.26 per barrel, having shed 2.4 percent on Wednesday to $58.76 a barrel.
The two markets had gained more than 1 percent in early Asian trade.
Chief Strategist Michael McCarthy stated that they have seen huge increases in supply and the demand picture is in question, but they might see some movement on global trade issues at the G20 meeting which starts on Friday,
McCarthy added that they could be seeing some positioning ahead of the potential demand-positive events.
Investors in commodity markets are anticipating the G20 meeting, which includes the world’s largest economies, on November 30 and December 1, with the US-China trade war as the main subject.
US President Donald Trump is open to establish a trade agreement with China but his administration has also warned to raise tariffs on imports from the country if there is no deal reach concerning the longstanding trade conflict during Trump and Chinese President Xi Jinping’s meeting on Saturday.
Xi said China will provide more market access for foreign investors and strengthen protection of intellectual property rights further.
US Inventories Keeping a Lid on Oil Prices
Mounting US inventories, however, is putting a cap on oil prices.
Prices came under renewed selling pressure after data released by the Energy Information Administration on Wednesday showed US crude supplies added 3.6 million barrels to 450.5 million barrels for the week to November 23, its biggest gain in a year.
Investment analyst William O’Loughlin stated that WTI was able to trade around the $50 per barrel level, a price last seen well over a year ago, due to the current oversupply situation which has manifested itself in 10 consecutive weekly increases in US oil inventories.
The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members are set to meet in Vienna on December 6 to talk about a new round of output cuts of 1 million to 1.4 barrels per day (bpd) and possibly more.
Nigeria’s Minister of State for Petroleum Resources Ibe Kachikwu and Saudi Arabian Energy Minister Khalid al-Falih said the stability of oil prices is a priority ahead of the meeting.
Saudi Arabia has over 35 percent of the OPEC, which means whatever happens in the country is very critical to what happens to OPEC, according to Kachikwu.
The OPEC meeting is expected to reach a decision for the next six months.