SINGAPORE- Oil prices on Monday slid off near three-month highs hit last week as investors searched for clarity beyond the initial impact of a trade deal between the United States and China that’s expected to boost flows between the top two global economies.
Brent crude oil futures fell 22 cents, or 0.3 percent to $65.00 a barrel by 0400 GMT, while West Texas Intermediate crude was down 23 cents or 0.4 percent to $59.84 a barrel.
The United States and China cooled long-simmering trade tensions on Friday, announcing a “phase one” agreement that reduces some US tariffs in exchange for what US officials said would be a big jump in Chinese purchases of American farm products and other goods.
“It seems the market has now fully priced (in) the phase 1 trade agreement, so we are going to need further news if we are going to push through the important (technical) resistance that is just ahead,” said Michael McCarthy, chief market strategist at CMC Markets.
The Friday agreement averted additional tariffs on Chinese goods totaling $160 billion that the United States was set to impose over the weekend, but investors remained cautious as they awaited precise details of how the trade deal would work.
US Trade Representative Robert Lighthizer said on Sunday the deal will nearly double US exports to China over the next two years and is “totally done” despite the need for translation and revisions to its text.
China’s State Council’s customs tariff commission said on Sunday that it has suspended additional tariffs on some US goods that were meant to be implemented on Dec. 15.
“What the market needs now, though, is clarity around exactly what the deal entails,” analysts from ING Economics said in a note on Monday.
“The longer we have to wait for this detail, the more likely market participants will start to question how good a deal it actually is.”
Data from China on Monday that showed industrial output and retail sales growth accelerating more than expected in November did offer some support for oil prices.
Still, investors remained cautious as growth in China is expected to slow further next year, with the government likely to set its economic growth target at around 6 percent in 2020 compared with this year’s 6-6.5 percent.
Brent has rallied this year, supported by efforts by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia to cut production.
The alliance, known as OPEC+, has agreed to lower supply a further 500,000 barrels per day as of Jan. 1, which could boost oil prices.
Meanwhile, China’s crude oil throughput in November rose 10.1 percent from the same month a year earlier, to the second-highest on record, as refineries in the world’s no. 2 oil consumer ramped up production amid steady profit margins.
Crude processing volumes reached 56.08 million tons, equivalent to about 13.65 million barrels per day (bpd), data released by the National Bureau of Statistics showed on Monday. That was a fraction below the record of 13.75 million bpd reached in September, and up from October’s 13.62 million bpd.
The robust throughput level came as China – the world’s top oil importer – brought in a record volume of imported crude last month at 11.13 million bpd.
Output was bolstered by new mega-refining complexes such as those of Hengli Petrochemical Co Ltd and Zhejiang Petroleum and Chemical Co, as well as higher runs at independent plants as they returned from maintenance outages. – Reuters