WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange oil futures nearest delivery and Brent futures on the Intercontinental Exchange slipped in early trading Monday following industry data on Friday detailing an increase in the U.S. rig count, while Washington and Beijing prepare for a key round of trade negotiations this week.
Nymex March West Texas Intermediate futures were down $1.70 at $51.99 barrel (bbl) in midmorning trade, with ICE March Brent futures posting a $1.52 losses to $60.12 bbl. February ULSD futures slumped 4.36 cents to $1.8483 gallon, and February RBOB futures dropped 4.42 cents to near $1.3452 gallon.
In a fresh sign that record oil production in the United States would continue, Baker Hughes Friday afternoon reported the number of rigs drilling for oil increased last week, up 10 to 862, marking the first weekly increase in 2019. The U.S. oil rig count is up 103 against year ago, while still down 23 so far in 2019.
The increase in rigs comes despite reports of a slowdown in production growth, with U.S. crude output at a record high 11.9 million barrels per day (bpd) during the two weeks ended Jan. 18 according to the Energy Information Administration, which is weighing on oil markets. The EIA last week said it expects tight shale oil production in seven key U.S. producing regions to increase by a modest 62,000 bpd from this month to average 8.179 million bpd in February, the lowest growth rate in nine months.
This week opens a key round of trade negotiations between the United States and China with high level Chinese ministers are expected to have arrived in Washington, D.C. today for bilateral meetings scheduled for Wednesday and Thursday (1/30-31). Despite reports of some progress, U.S. Commerce Secretary Wilbur Ross said last week that Washington and Beijing were "miles and miles" away from any trade agreement.
U.S. President Donald Trump and China's President Xi Jinping reached a 90-day truce in the trade war between the two countries in an attempt to address systematically unbalanced bilateral trade relations. According to U.S. Bureau of Economic Analysis data, American goods exports to China amounted to a total of $102.5 billion while China's goods exports to the United States came in at $447 billion in the first 10 months of last year. That gave China a $344.5 billion trade surplus, a number that accounts for nearly one-half of America's total trade gap.
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