SINGAPORE/LONDON: Oil prices fell on Wednesday as prospects for a trade deal between the United States and China faded, weighing on the outlook for the global economy and energy demand.
Brent crude futures fell $0.75, or 1.25pc, to $61.31 a barrel by 1030 GMT, while US West Texas Intermediate crude was at $56.30, down $0.5 or 0.9pc.
“The expectations of an inventory build in the US and uncertainty over the OPEC+ strategy on output cuts and US-China trade deal are weighing on oil prices,” said analysts at ING including the head of commodity strategy Warren Patterson.
The Secretary General of the Organisation of the Petroleum Exporting Countries (OPEC), Mohammad Barkindo, said he was still confident the United States and China would reach a trade deal.
“It will almost remove that dark cloud that had engulfed the global economy,” he said, adding that it was too early to discuss output policy of OPEC’s December meeting.
In the United States, crude oil inventories were forecast to have risen for a third straight week last week, while refined products inventories likely declined, a preliminary Reuters’ poll showed on Tuesday.
ANZ analysts said the prospects for US crude exports had turned bleak after shipping rates jumped last month.
The American Petroleum Institute (API) was scheduled to release its data for the latest week at 4:30 pm EST (2130 GMT) on Wednesday, while the weekly report from the US Energy Information Administration (EIA) is due at 11:00 am EST on Thursday.
Separately, the Keystone oil pipeline that transports Canadian heavy crude to the United States has restarted operations following an oil spill two weeks ago.
A forecast by the International Energy Agency for slower global oil demand growth post-2025 also weighed on the market.
Global oil demand is expected to grow by 1 million barrels per day (bpd) on average to 2025 but is forecast to slow to 100,000 bpd a year from then on as fuel efficiency improves, the IEA said in its annual outlook to 2040.