(Bloomberg) – Oil headed for a third weekly decline as traders focused on growing signs of oversupply and the fallout from renewed U.S.-China trade tensions.
U.S. President Donald Trump said he would hold a second meeting with Russia’s Vladimir Putin “within two weeks or so” aimed at ending the war in Ukraine, raising the possibility of more supply.
Brent traded near $60 a barrel, on track to drop another 4% this week in its longest losing streak since March. Investors worry that rising friction between the two biggest crude consumers could hurt global economic growth and energy demand.
Meanwhile, forecasts for a glut have become more prominent after the International Energy Agency earlier this week raised its estimate of global oversupply next year by almost a fifth. U.S. President Donald Trump said he would hold a second meeting with Russian counterpart Vladimir Putin “within two weeks or so” aimed at ending the war in Ukraine, raising the possibility of more supply.
Western nations are turning the screws on Russia’s energy sector in a bid to curb the flow of petrodollars to the Kremlin and limit Putin’s ability to finance the war. India’s oil refiners said they expect to reduce — not stop — the purchase of Russian crude following remarks by Trump that the South Asian nation would halt all buying.
“The unresolved U.S.-China trade dispute continues to drive the market’s risk-off sentiment, while the de-escalation of the Russia-Ukraine situation has led to a further decline in geopolitical risk premiums,” said Gao Mingyu, chief energy analyst at SDIC Essence Futures Co. There is further downward pressure due to the expectations of an expanded glut this quarter, she said.
A U.S. government report, meanwhile, showed U.S. crude inventories swelled for a third week to the highest since early September. Still, inventories at Cushing, Oklahoma, the delivery point for WTI, fell to the lowest since July.
