This archive report was first published on 11 November 2019.
Oil prices plummeted more than 1% on Monday, November 11, 2019, amid growing concerns over the prospects of a trade deal between the United States and China. The trade war has slowed economic growth worldwide and prompted analysts to lower forecasts for oil demand, raising fears of a supply glut in 2020.
Brent crude fell 69 cents, or 1.1%, to $61.82 per barrel by 0730 GMT, while U.S. crude dropped 63 cents, or 1.1%, to $56.61 a barrel. The decline came despite U.S. President Donald Trump's statement on Saturday that trade talks with China were progressing 'very nicely,' but only if the deal was right for America.
Analysts pointed to the 16-month trade war between the world's two largest economies as a major factor in the decline. Data over the weekend showed that China's producer prices fell the most in over three years in October, as the manufacturing sector weakened due to the dispute and declining demand.
Auto sales in China fell for a 16th consecutive month in October, with new energy vehicle sales contracting for the fourth month in a row, according to data released on Monday. Investors are also concerned about excess supplies of crude, analysts said.
Despite the decline, OPEC Secretary-General Mohammad Barkindo suggested last week that the oil market outlook for next year may have upside potential, with no need to cut output further. The Organization of the Petroleum Exporting Countries and its allies, led by Russia, meet in December to discuss output levels.
Money managers boosted their net long U.S. crude futures and options positions in the week to November 5 by 22,512 contracts to 138,389, according to the U.S. Commodity Futures Trading Commission (CFTC). Energy companies in the United States reduced the number of oil rigs operating for a third week in a row, with drillers cutting seven rigs in the week to November 8, bringing the total count down to 684, the lowest since April 2017, Baker Hughes said.
