U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Tuesday after President Donald Trump suggested he may want to delay a trade deal with China until after the 2020 presidential election. However, losses are likely being limited by the news that OPEC and its allies may push for deeper output cuts when it meets later this week.
Trump’s Comments Renew Demand Worries
“In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we will see whether or not the deal is going to be right,” Trump told reporters earlier on Tuesday. When asked if he had a deal deadline: I have no deadline, no… In some ways, I think it is better to wait until after the election if you want to know the truth.”
OPEC+ to Discuss Increasing Supply Cuts
OPEC and its allies are expected to discuss a plan to increase an existing supply cut of 1.2 million barrels per day (bpd) by a further 400,000 bpd and extend the pact until June, two sources familiar with the matter said.
Traders should continue to look for heightened volatility ahead of the OPEC meeting on December 5-6. It remains unclear if there is consensus within the group to achieve a deeper cut.
Russian Energy Minister Alexander Novak said on Tuesday he expected this week’s meeting to be constructive, but added that Moscow had yet to finalize its position.
Meanwhile Vagit Alekperov, CEO of Russia’s No. 2 oil producer Lukoil said it would not be expedient to deepen production cuts in the winter season, especially for Russia.
The early price action suggests worries about the supply side can wait until later in the week. Most concerns on Tuesday are about the timing of a trade deal and its impact on demand growth.
This article was originally posted on FX Empire
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