(Bloomberg) -- Crude settled lower Monday amid conflicting signals about the prospect for a thaw in U.S.-China trade relations.
Futures in New York sank to the lowest level in more than two weeks after earlier rising as much as 2%. At the G-7 Summit in France, U.S. President Donald Trump said Beijing requested to “get back to the table,” a hopeful comment that saw oil prices rise. But an influential Chinese media executive quickly downplayed the significance of that outreach.
“Overall, the G-7 meetings haven’t been particularly positive, and that’s why some of the earlier gains are being pulled back,” said Ellen Wald, president of Transversal Consulting, an energy and geopolitics consultancy.
There was also little optimism over possible talks between the U.S. and Iran for a new nuclear deal, after Trump floated the idea of a meeting with with President Hassan Rouhani that could lead to easing oil and economic restrictions so the Islamic Republic.
“There’s been talk about a Trump meeting with Iran, that they want to do a nuclear deal. He doesn’t trust them, so Trump won’t make a deal,” said Phil Streible, senior market strategist at RJO futures.
Besides, “there’s an oversupply of oil, specifically in the U.S,” he said. Crude stocks in America are at almost 438 million barrels at a time global demand growth has been brought to question.
West Texas Intermediate crude for October delivery settled 53 cents lower to $53.64 a barrel on the New York Mercantile Exchange.
Brent for October settlement fell 64 cents to $58.70 a barrel on the ICE Futures Europe Exchange. Brent traded at a premium of $5.06 to WTI.
China called “our trade people and said let’s get back to the table,” Trump said in France. “We’re going to start very shortly and negotiate and see what happens but I think we’re going to make a deal.”
Asked by reporters in Beijing about Trump’s remarks, China’s Foreign Ministry spokesman Geng Shuang said that he wasn’t aware of any weekend calls between the two countries. Later, Hu Xijin, editor-in-chief of China’s Global Times newspaper, said in a tweet that top trade negotiators hadn’t spoken by phone in recent days and that Trump was exaggerating the significance of the trade contacts.
The market will now be looking to the release of U.S. government and industry petroleum data Tuesday and Wednesday for more market direction, Wald added.
There will be particular focus on gasoline inventory data ahead of the Labor Day weekend, the last major U.S. holiday that caps the driving season, before a typically low-demand period follows. Last week, a surprise build in fuel inventories pushed prices across the petroleum complex lower.
--With assistance from James Thornhill and Sharon Cho.
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