Futures Movers: Oil prices drop as trade deal doubts emerge, renewing concerns over energy demand

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Oil futures headed sharply lower on Monday, poised to give back much of their gains from last week, as China has reportedly asked for more talks with the U.S. before signing “phase one” of a trade deal that President Donald Trump announced on Friday.

“After trade optimism pulled crude prices higher into the weekend,” futures prices have reversed to trade lower as “demand fears persist,” said Robbie Fraser, senior commodity analyst at Schneider Electric.

Beijing wants to hold further talks with Washington before signing what Trump referred to late last week as “phase one” of a trade deal, Bloomberg reported Monday, citing people familiar with the matter.

Monday’s losses “come amid several high-profile downward revisions to demand expectations in recent weeks, including from the International Energy Agency and Organization of the Petroleum Exporting Countries’ Oil Market Report, Fraser said.

West Texas Intermediate crude for November delivery CLX19, -2.72%  fell by $1.72, or 3.1%, to trade at $52.98 a barrel on the New York Mercantile Exchange. Prices had settled at a two-week high on Friday, with the front-month contract ending 3.6% higher for the week.

The global benchmark, December Brent crude BRNZ19, -2.63%  lost $1.54, or 2.6%, to $58.97 a barrel on ICE Futures Europe after last week’s gain of 3.7%.

“On the geopolitical front, Saudi Arabia has denied any involvement on last week’s apparent attack on an Iranian oil tanker near the Saudi Arabian city of Jeddah,” said Fraser, in a daily note. “Iran’s own media reports have offered conflicting accounts, first blaming Saudi Arabia before later withdrawing the claim.”

Also in Saudi Arabia, “production is expected to return near normal levels in the coming weeks as the country looks to restore output lost to attacks on their own oil infrastructure in mid-September,” Fraser said. “With any disruption to flows and exports confined to the near-term, the market remains hesitant to place any meaningful risk premium on current price benchmarks.

Back on Nymex, November gasoline RBX19, -2.47%  fell 2.7% to $1.5946 a gallon after a weekly gain of around 4.2%, while November heating oil HOX19, -2.19%  shed 2.4% to $1.9109 a gallon following a rise of 3.3% last week.

November natural gas NGX19, +2.94%  traded at $2.271 per million British thermal units, up 2.6%. It lost 5.9% last week.