Oil prices slid on Thursday as hopes faded for any significant progress in U.S.-China trade talks that could dispel clouds over the global economy and gloom over prospects for weaker oil demand.
Global benchmark Brent crude futures fell 26 cents, or 0.5 per cent, to $58.05 a barrel while U.S. West Texas Intermediate crude was at $52.38 per barrel, down 21 cents, a 0.4 per cent drop.
Chinese government officials told Reuters that China has lowered its expectations for progress in the talks to end a 15-month-old tit-for-tat trade dispute that has slowed global economic growth, upset by the U.S. blacklisting of Chinese companies.
U.S. President Donald Trump expressed optimism on Wednesday, saying there was a very good chance the two sides will reach a trade agreement. But with high-level trade discussions set to start later on Thursday, the South China Morning Post reported the pair had made no progress in preliminary, lower-level talks.
“Oil prices are basically left weighed down by yet another trade war anvil around the market neck,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.
“Traders likely have their finger to the wind trying to gauge the intensity of the latest headwinds but at minimum prices could be capped until the markets get some type of favourable headline tailwind at least,” Innes said
Adding to concerns, U.S. crude stocks rose 2.9 million barrels in the week to October 4, the Energy Information Administration, (EIA) said, more than double analysts’ expectations for an increase of 1.4 million barrels.
Meanwhile, the Organization of the Petroleum Exporting Countries, OPEC, has granted Nigeria a higher oil output target under an OPEC-led supply cut deal, lifting the quota to 1.774 million barrels per day (bpd) from 1.685 million bpd, three OPEC delegates with knowledge of the matter said.