Oil prices settled lower on Monday, paring earlier gains as hopes of a comprehensive U.S.-China trade deal faded and a new poll showed analysts expected U.S. oil crude inventories to have risen last week.
Brent crude LCOc1 settled down 2 cents, or 0.03%, at $58.35 a barrel, after hitting a high of $59.68. U.S. West Texas Intermediate (WTI) crude CLc1 settled at $52.75, down 6 cents or 0.11%, after hitting a high of $54.06.
Hopes of progress in U.S.-China trade talks had helped lift prices earlier in the session. U.S. and Chinese officials meet in Washington on Thursday and Friday in a fresh effort to work out a deal, which U.S. President Donald Trump said his administration had a “very good chance” of achieving.
But China’s Commerce Ministry tempered expectations when it said it could reach a trade agreement on issues that both the United States and China already agree on, but that it will set a timetable for more difficult issues to be worked out next year, according to tweets from a Fox Business reporter.
“That casts a big of a pall over the trade talks and suggests they’re not inclined to do a big deal,” said John Kilduff, partner at Again Capital LLC in New York.
“Earlier today prices were supported by optimism of a U.S.-China deal,” said Andy Lipow, president of Lipow Oil Association in Houston. “The market is disappointed there won’t be a comprehensive trade deal that’s agreed to.”
Adding pressure on prices, a new poll showed analysts expect U.S. crude stocks increased last week. U.S. crude inventories likely climbed for the fourth consecutive week last week, rising an estimated 2.6 million barrels.
Both futures contracts ended last week with a more than 5% decline after dismal manufacturing data from the United States and China, with the trade war between the world’s top economies undermining global economic prospects.
Prices had climbed earlier on Monday as deadly anti-government unrest gripped Iraq, the second-largest producer among the Organization of the Petroleum Exporting Countries (OPEC).
Iraq’s oil exports of 3.43 million barrels per day (bpd) from Basra terminals could be disrupted if instability lasts for weeks, Ayham Kamel, Eurasia Group’s practice head for Middle East and North Africa, said in a note.
OPEC Secretary-General Mohammed Barkindo said it was still too early for the group to discuss deeper oil output cuts to support prices, Russian news agency TASS reported on Monday.
Despite Monday’s earlier gains, Brent is still down more than 20% from the 2019 peak of $75.60 a barrel recorded in April.
“It took it on the chin last week,” said Robert Yawger, director of energy futures at Mizuho in New York. “It was an oversold market that some people in the spec community thought they could push, and they’ve gotten a nice rally out of it here.”