Oil holds around $60 as U.S.-China trade hopes support
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[September 13, 2019] By
Alex Lawler
LONDON (Reuters) - Oil steadied above $60 a
barrel on Friday as hints of progress in the U.S.-China trade dispute
balanced concerns about slowing global economies and oil demand.
The world's two largest economies are preparing for new talks aimed at
curbing the spat that has lasted for over a year. They have been making
conciliatory gestures ahead of the talks, cheering investors.
"Both sides have made further displays of goodwill," said Stephen
Brennock of broker PVM. "The upshot is that no further deterioration in
the economic environment is expected, hence the downside for oil prices
should be limited in the near term."
Benchmark Brent crude <LCOc1> was down 6 cents at $60.32 a barrel by
1152 GMT, while U.S. West Texas Intermediate <CLc1> rose 2 cents to
$55.11.
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Concern about a weaker demand outlook, leading to potential oversupply,
weighed.
OPEC and the International Energy Agency (IEA) issued reports this week
pointing to a surplus next year, despite a pact by OPEC and its allies,
a producer alliance known as OPEC+, to limit supplies. The deal runs
until March.
"In order to avoid a price slide and a massive inventory build, OPEC+
would need to implement further voluntary production cuts," said Eugen
Weinberg, analyst at Commerzbank.
"The challenge facing OPEC+ is thus likely to become even bigger next
year, maintaining the pressure on the oil price."
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Oil pump jacks work at sunset near Midland, Texas, U.S., August 21,
2019. REUTERS/Jessica Lutz/File Photo
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Brent has traded in a range of nearly $5 this week and is heading for its first
weekly loss in five weeks. The U.S. benchmark, similarly volatile, was on track
for the first weekly drop in three weeks.
Brent is up 12% in 2019, helped by the deal between the Organization of the
Petroleum Exporting Countries and allies including Russia to cut output by 1.2
million barrels per day.
The producers are trying to stop inventories from building up and, in a sign the
plan is bearing fruit, U.S. crude stocks fell last week to the lowest in nearly
a year.
An OPEC+ monitoring committee met this week and secured pledges from OPEC
members Nigeria and Iraq to deliver their share of the cut, something they have
failed to do so far, but made no progress on possibly deepening the supply
curbs.
Some OPEC delegates say the idea of a larger cut for next year is gaining
support. But Saudi Arabia's new energy minister said talks on that issue would
be left until the next OPEC+ meeting in December.
(Additional reporting by Aaron Sheldrick; Editing by Edmund Blair and Chizu
Nomiyama)
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