A worsened situation with the U.S./China talks has brought back worries about demand for oil in case the trade war continues. WTI dropped 1.2% to $56.58 after a strong 1.9% gain a week earlier. Meanwhile, Brent lost 0.9%, and is trading at $61.97, after a 1.3% gain of last week.
In one of his more recent remarks, U.S. President Donald Trump claimed that China wanted to make a deal deal a lot more than than the U.S., raising doubts whether the two nations are actually close to a potential trade deal.
Oil got a short-term boost on Friday after Baker Hughes reported that the number of active drilling rigs in the U.S was falling for a third consecutive week. This gave a signal that there was a pause in drilling activity, which is usually bullish for commodity prices. However, Bloomberg reported that OPEC and partners were not likely to push for deeper production cuts when they meet in December, which could restrain bullish sentiment.
Equities lack high conviction
European stocks as well as their U.S. counterparts are sagging on Monday on the lack of progress in trade talk between U.S. and China, especially after President Trump said media reports about agreements for tariff rollbacks were inaccurate, thus dispelling the upbeat momentum that has recently propelled stocks to all-time highs.
The UK released the worse than expected data on Q3 GDP. The economy has expended by 1% yoy, which is the worst reading in more than nine years. Moody’s on Friday cautioned that it could downgrade the UK’s credit rating on lack of progress in political talks and concerns about the country’s spending plans.