Oil Prices Weaken amid Trade Uncertainty
Oil prices pared gains on Tuesday amid uncertainty over the US-China phase one trade deal announced by Washington last week. Firm
The US West Texas Intermediate (WTI) crude oil futures were down 0.2% to $60.02 per barrel. While international benchmark Brent crude oil futures fell 0.2% to $65.16 per barrel.
Progress on trade has the potential to support oil demand. But the market is still assessing the advantages of the deal, according to analyst Phil Flynn.
The energy commodities market has been propped up this month by the Organization of the Petroleum Exporting Countries’ (OPEC) plans to cut as much as 2.1 million barrels, or 2.1% per day on global supplies in the first quarter of 2020.
WTI has surged 9% so far this December, on track for its strongest month since June, while Brent has inched up 4% on the month and 22% for this year.
Elsewhere, precious metals, including the gold and silver traded optimistically, with gold futures gaining 0.1% to $1,481.95 per ounce.
Silver rose by 0.06% to $17.10 per ounce, but later eased by 0.03%.
A Canadian investment bank stated that the gold is holding strong, despite the fact that they have now scratched off many of the worst-case scenarios in just a few weeks.
Phase One Trade Deal Skepticism
While stock markets registered record highs for the third straight session. And White House Economic Adviser Larry Kudlow had stated that the phase one trade deal is absolutely completed. Some investors remained skeptical about Beijing’s more cautious behavior on the agreement since Friday.
Media reports have pointed out that the demand of approximately $50 billion worth of annual farm purchases has been a problem for China.
The country could simply acquire grains and feedstock from Brazil and elsewhere for better prices and precise amount, without the need for such pledges, according to trade sources.
Details surrounding the date of phase two discussions remained murky as well.
Chinese officials said the wording of the phase one trade deal, to be signed next month, remained a delicate issue.
The two countries would like to make sure that expressions used in text would not spark tensions once again and intensify the conflict, the report stated.
The second phase of negotiations would begin pretty soon, according to Kudlow, although he did not specify the date.
Phase Two and its outcome will depend in some way on the success of Phase One. The two are going to be linked, Kudlow said.
