Oil pauses its gains as US-China trade fight affects sentiment

New York — Oil prices were flat on Monday, pausing after last week’s substantial gains as a committee monitoring a deal between oil cartel Opec and non-Opec producers saw production increasing and a US-China trade dispute also weighed on sentiment.

Brent crude futures rose 11 US cents to $75.93 a barrel by 3.14pm GMT. US West Texas Intermediate (WTI) crude futures fell 3c to $68.69 a barrel. Last week, WTI posted a 4.3% weekly gain while Brent marked a 5.6% weekly increase.

Traders said prices pulled back after market intelligence firm Genscape reported that inventories at the Cushing, Oklahoma delivery hub for WTI rose by about 764,800 barrels from August 21 to the close of business on Friday.

Members of an Opec and nonOpec monitoring committee found that producers cut their July output by 9% more than called for in their output reduction pact, two sources familiar with the matter said. This compared with a compliance level of 120% for June and 147% for May, meaning participants have been steadily increasing production.

Opec and other producers led by Russia agreed in June to return to 100% compliance with oil output cuts that began in January 2017. This followed months of underproduction by Venezuela and other producers, which cut output by 160% of the agreed target.

The committee groups representatives from Saudi Arabia, Russia, the United Arab Emirates, Kuwait, Algeria, Venezuela and Oman.

Prices have been buoyed in recent weeks by the view that the oil market will tighten when US sanctions targeting Opec member Iran’s oil exports kick in November.

“While the Iranian sanctions issue certainly isn’t new news, suggestions out of the White House that waivers will be restricted appeared to augment last week’s price gains,” said Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

In a phone call to French President Emmanuel Macron, Iranian President Hassan Rouhani said on Monday that Iran wanted the Europeans to give guarantees on banking channels and oil sales, as well as in the field of insurance and transportation, according to the state-run Iranian news agency Irna.

Pressuring oil prices have been concerns that an escalating US-China trade war could slow economic growth and energy demand.

China’s Unipec will resume purchases of US crude in October after a two-month halt due to the trade dispute between the world’s two largest economies, three sources with knowledge of the matter said.

Reuters