(London) REUTERS: Oil prices fell yesterday after data showed Chinese exports declined for a fourth straight month, sending jitters through a market already concerned about damage to global demand by the trade war between Washington and Beijing.
Brent futures were down 64 cents, or 0.99 percent, at US $ 63.75 per barrel by 1153 GMT, after gaining about 3 percent last week on news that OPEC and its allies would
deepen output cuts.
West Texas Intermediate oil futures were also down 64 cents or 1.08 percent to US $ 58.56 a barrel, having risen about 7 percent last week on the prospects for lower production from “OPEC+”, which is made up of the Organisation of the Petroleum Exporting Countries and associated producers including Russia.
Yesterday’s sudden chill came after customs data released on Sunday showed exports from China in November fell 1.1 percent from a year earlier, confounding expectations for a one percent rise in a Reuters poll.
“China is clearly not immune to either the U.S. trade tariffs or the lingering slowdown in the broader global economy,” said Jeffrey Halley, Senior Market Analyst at OANDA.
Washington and Beijing have been trying to agree a trade deal that will end tit-for-tat tariffs but talks have dragged on for months as they wrangle over details.
Beijing hopes an agreement with the United States can be reached as soon as possible, China’s Assistant Commerce Minister Ren Hongbin said yesterday.
Yesterday’s declines also went against signs on Friday that China was easing its stance on resolving the trade dispute with the United States, confirming that it was waiving import tariffs for some soybean and pork shipments.
The price drop also put an end to a strong run in previous sessions fuelled by hopes for the OPEC+ production curb deal.
On Friday, OPEC+ agreed to deepen their output cuts from 1.2 million barrels per day (bpd) to 1.7 million bpd, representing about 1.7 percent of global production.
“This decision crystallises an important shift in strategy to managing short-term physical imbalances rather than trying to correct perceived long-term imbalances through open-ended commitments,” Goldman Sachs said in a note.
The bank revised its Brent spot price forecast to US $ 63 per barrel for 2020, up from a previous estimate of US $ 60.
BofA Merrill Lynch said in a note that strong compliance with the OPEC+ along with positive economic developments like a U.S.-China trade deal could push Brent to US $ 70 a barrel before the second quarter of 2020.