Markets may have the rest of the week to wait out a possible China-U.S. deal, but weak Chinese exports data are already giving investors an ominous feeling, sending oil prices lower on Monday.
Crude futures remained in negative territory by New York’s afternoon trade after failing to recapture Friday’s outperformance that saw the U.S. oil benchmark gain more than 7% on the week — its best weekly run since June — on deeper output cuts pledged by world oil producers. Stupendous U.S. jobs data for November, released Friday by the Labor Department, added to the oil rally.
U.S. West Texas Intermediate crude was down 8 cents, or 0.14%, at $59.12 per barrel by 1:47 PM ET (18:47 GMT). It reached a five-month high of $59.84 on Friday, just cents short of the $60 level.
U.K. Brent, the global benchmark for crude, slid by 3 cents, also 0.05%, to $64.36. It hit a three-month intraday high of $64.88 on Friday.
Saudi Arabia, Russia and other oil producers banded under the OPEC+ alliance agreed in Vienna on Friday to reduce daily output by a total of 2.1 million barrels, or 2.1% of world supply, over the first quarter of next year.
Yet oil prices fell on Monday 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. Unless a trade deal is signed by Dec. 15, the Trump administration is set to raise tariffs further on Chinese imports.
Customs data released on Sunday showed exports from China in November fell 1.1% from a year earlier, confounding expectations for a 1% 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.
Analysts were also skeptical about the OPEC+ deal.
“We think that the net impact on real supplies will be limited and depends too much on Iraq making very sharp cuts to its production,” said Olivier Jakob of oil risk consultancy PetroMatrix said. Iraq has been OPEC’s most errant member on production accords.
OPEC will release on Wednesday its monthly oil report, followed by the more important International Energy Agency (IEA) report on global supply-demand.
“It will be interesting to see the IEA read of the impact of the new OPEC deal on the global supply and demand," Jakob said.
