Oil prices inched higher on Monday, following steady gains from previous week as investors await further news on the trade talks between US and China. Concerns over increasing oil supplies, possibly developing into a supply glut, were shrugged.
Brent crude futures was unchanged from previous session, at $63.30 a barrel at 0512 GMT. The contract increased 1.3% last week.
West Texas Intermediate (WTI) crude CLcl also remain unchanged at $57.72 a barrel, after gaining 0.8% the previous week.
Margaret Yang, market analyst at CMC Markets said that the “crude oil market is flat on Monday morning, as price consolidates after Friday’s big rally.”
On Friday, oil futures gained almost 2% as the market once again showed optimism following a top U.S. trade official expressed that the US and China were having agreeable talks for a trade deal. However, worries of increasing supplies of crude oil cut prices.
China and the U.S. have been back and forth in raising tariffs on a 16-month ongoing trade war. The dispute has slowed global economic growth, prompting analysts to lower forecasts for oil demand in 2020, adding that a supply glut was possible.
The world’s two largest economies have been reported to have high-level trade talks over phone, however no further details about its content were revealed.
“In the short term, US-China trade talks and OPEC meeting in early December are the two biggest events oil traders are watching for,” Yang said.
The Organization of the Petroleum Exporting Countries (OPEC) said that it was expecting a fall in demand for 2020, after market data showed that OPEC and other producers like Russia—known as ‘OPEC+’—to limit their production due to excess in supply.
OPEC and its allies are set to meet in Vienna in Dec. 5-6 to discuss output policy. Their current production deal ends in March.
The International Energy Agency (IEA) released a report that non-OPEC supply growth are set to rise at 2.3 million barrels per day next year, compared to 2019’s 1.8 million bpd, with supplies coming from the US, Norway, Brazil, and Guyana.
Data also showed that weekly US crude stockpiles increased by 2.2 million barrels, exceeding analyst forecasts of 1.649 million-barrel rise.