Crude oil futures were steady in mid-morning trade in Asia Thursday as investors digested news of a delay in the signing of a US-China trade deal and a bigger-than-expected increase in US crude stocks. At 10:47 am Singapore time (0247 GMT), ICE January Brent crude futures was 2 cents/b (0.03%) higher from Wednesday’s settle at $61.76/b, while the NYMEX December light sweet crude contract inched a cent (0.02%) higher at $56.36/b.
“Asian markets may trade sideways today as investor digest the possibility that the phase one US-China trade agreement may not materialize till December,” OCBC analysts wrote in their report on Thursday. News emerged late Wednesday that a meeting between the US and China to sign the phase one of a trade deal could be delayed to December.
“Risk sentiment can be seen dampened with the lack of sustained positive news streaming in on US-China trade, with the latest reports of a delay to the ‘Phase One’ deal signing to December casting some shadows on the matter,” Jingyi Pan, market strategist at IG, wrote in a note on Thursday. Meanwhile, the US Energy Information Administration has reported a bigger-than-expected crude stock build of 7.9 million barrels for the week ending November 1. The increase in inventories was attributed to a drop in US crude exports as well as a drop in crude runs.
The increase in crude stock exceeded analysts’ expectations of a 2.7 million barrel build, according to an S&P Global Platts survey earlier in the week. The ongoing trade dispute with China could significantly hinder US crude oil export growth, as US producers lose access to a top demand market, participants at a US Association for Energy Economics conference said this week.
“China’s the big growth in demand,” Horace Hobbs, Phillips 66’s chief economist, said during a panel earlier this week. “The whole focus of US exports will eventually somehow have to get back to China.”