Oil steadied near $53/bbl amid a weak outlook for the global economy, while estimates of increased U.S. crude stockpiles suggested that supplies remain abundant.
Futures were 0.4% lower in New York, recovering from earlier declines of as much as 2.2%. Investor confidence remained weak in Germany amid concern the nation has slipped into recession, while the ongoing struggle between the U.S. and China to hammer out even a limited trade deal prolonged fears their trade war will crimp growth. U.S. equity-index futures rose with shares in Europe as major companies began reporting third-quarter earnings.
Even if the U.S. and China manage to agree on the partial deal, it’s unlikely to have a major impact on slowing economic growth as existing tariffs won’t be rolled back. The International Energy Agency last week trimmed forecasts for oil consumption for this year and 2020 amid the deteriorating economic backdrop. Disappointing economic data from Germany on Tuesday added to the concerns.
“Concerns over the fallout of a negative outcome of these negotiations on the global economy and thus oil demand are running high,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.
West Texas Intermediate for November delivery fell 21 cents to $53.38/bbl on the New York Mercantile Exchange as of 8:35 a.m. Eastern. It dropped $1.11 on Monday, wiping out most of Friday’s $1.15 increase.
Brent crude for December settlement declined 7 cents, or 0.1%, to $59.28/bbl on the London-based ICE Futures Europe Exchange, and traded at a premium of $5.81 a barrel to WTI for the same month.
“It’s clearly a market that is very macro-focused right now,” said Ole Sloth Hansen, head of commodities strategy at Saxo Bank A/S in Copenhagen. “Speculators have been quite aggressive sellers during the past couple of weeks.”
U.S. crude inventories rose by 3.1 million bbls last week, according to the median estimate in a Bloomberg survey. That would make it a fifth week of gains, the longest run since February, if confirmed by official data due on Thursday. Stockpiles increased by 9.5 million bbls over the four weeks through Oct. 4, Energy Information Administration data show.
© 2019 Bloomberg L.P.