Oil prices slipped from a near three-month high as we enter into the last full week before the winter holiday, with investors hoping some clarity emerges from the new US-China trade deal. The introduction of this deal, finally, should help to boost some flow between the world’s top two economies.
That said, Brent crude oil futures dragged 0.3 percent, dropping 22 cents to $65 per barrel early on Monday. Global benchmark West Texas Intermediate crude oil was also down 23 cents, about 0.4 percent, to just under $60 per barrel. So far this year, Brent has rallied this year, mostly supported by production cuts from the Organization of the Petroleum Exporting Countries (OPEC), including allies like Russia. OPEC nations agreed to cut supply by another 500,000 barrels per day at the top of next year.
The long-awaited trade agreement between the United States and China is still in its “phase one” stage, but analysts say it should reduce, at least, some of the US tariffs China recently imposed. In exchange, at least it appears for now, China will buy more American agricultural products and other US-made goods.
According to US Trade Representative Robert Lighthizer, this deal could almost double the number of US exports to China across the next two years. He makes sure to add that while there is still a need to translate and revise the text, the deal is “totally done.”
Sure enough, China’s State Council customs tariff commission confided, also on Sunday this week, it has suspended additional tariffs on a handful of US goods which were supposed to be implemented starting this week. Following this announcement, data from China suggest both industrial output and retail growth accelerating at a rate better than what had originally been expected. These facts support oil price data.