NEW YORK- Oil prices were narrowly mixed on Tuesday, retracing early losses on optimism about a potential Brexit deal and signals from OPEC that further supply curbs are possible, but prices remained under pressure from U.S.-China trade worries and concern about swelling U.S. crude inventries.
Global benchmark Brent LCOc1 futures were up 2 cents to $59.37 a barrel by 12:40 p.m. EDT (1640 GMT), while U.S. West Texas Intermediate (WTI) crude CLc1 was down 10 cents, or 0.2%, to $53.49.
Earlier, both Brent and WTI were down by more than $1 a barrel after overnight reports that China’s factory gate prices in September declined at the fastest pace in more than three years. Also, customs data on Monday showed Chinese imports contracted for a fifth straight month.
“The initial selloff in oil was on concerns about global growth. There were reports the Chinese government wanted the United States to lift tariffs before China would start agricultural purchases,” said Phil Flynn, senior energy analyst at Price Futures Group in Chicago.
“But later in the session, prices started to recover after we heard from China that they found a way to work with the United States,” Flynn said.
A spokesman at the Chinese foreign ministry said Chinese firms have already purchased 700,000 tonnes of pork and 700,000 tonnes of sorghum from the United States this year.
On Friday, Trump said China had agreed to purchase $40 to $50 billion worth of American agricultural goods in a first phase of an agreement to end the trade war.
Providing more support for the oil and equities markets on Tuesday were reports Britain and the European Union made headway in eleventh-hour talks to work out a Brexit deal in time for a leaders’ summit this week.
Analysts said any deal that avoids a “hard” or no deal Brexit should boost economic growth.
OPEC Secretary-General Mohammad Barkindo said the Organization of the Petroleum Exporting Countries and allied producers “will do whatever (is) in its power” to sustain oil market stability beyond 2020.
OPEC, Russia and other producers have cut oil output by 1.2 million barrels per day to support the market. Yet an expected rise in U.S. crude inventories this week could keep prices under pressure. [EIA/S]
“Our expected 3.5 (million barrel) crude build will likely receive a bearish reception in maintaining this week’s downward momentum in the process of pushing WTI toward our expected support zone of $50-51.50 per barrel,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
U.S. oil inventory reports are due out from industry group the American Petroleum Institute on Wednesday and the U.S. Energy Information Administration on Thursday.