Crude Oil Contracts Slip Tuesday

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange moved shallowly mixed Tuesday afternoon, with both West Texas Intermediate and Brent settling near flat for the second straight day. The moves came amid growing uncertainty over reaching a resolution in the U.S.-China trade dispute after Washington blacklisted a number of Chinese entities ahead of a key round of bilateral trade talks this week.

NYMEX November WTI futures gave back $0.12 at $52.63 per barrel (bbl), while ICE December Brent settled $0.11 lower at $58.24 bbl. Products ended the session slightly higher, with NYMEX November ULSD futures gaining 0.68 cent to $1.9101 gallon and the November RBOB contract up 1.15 cents at $1.5809 gallon.

Crude contracts ended the session slightly lower, as hopes for a swift resolution in the yearlong trade dispute between the United States and China began to wane on Tuesday. A growing number of reports today suggested the Chinese delegation intends to cut their stay in Washington short, while the country's main negotiator, Liu He, will not represent Beijing as a "special envoy" during this week's visit.

The news follows the move by the U.S. government to blacklist 28 Chinese entities that prohibit them from doing business with U.S. companies over their alleged role in facilitating human rights abuses against China's Muslim population. Moreover, Bloomberg reported Tuesday White House is moving ahead with discussions around possible restrictions on investment flows into China, with a particular focus on investments made by U.S. government retirement funds.

U.S. Energy Information Administration on Tuesday cut its forecast for world oil supply in 2019 and 2020 in its latest Short-term Energy Outlook, which was led by downward output revisions for both Organization of the Petroleum Exporting Countries and non-OPEC producers in both years. Agency maintained its projections for world oil demand in the current year, while revised lower the forecast for 2020 consumption rate amid slowing global economy.

OPEC will release its market outlook on Thursday, followed by demand and supply estimates from the International Energy Agency on Friday.

Market participants also await a weekly rundown of supply figures on U.S. crude and petroleum stocks from last week. Crude oil inventories are expected to have risen 2.4 million bbl during the week ended Oct. 4, while stock draws of 1.2 million bbl for gasoline and 2.5 million bbl for distillate fuel are estimated.

American Petroleum Institute will release its estimates 4:30 p.m. EDT and official data from U.S. Energy Information Administration is due 10:30 a.m. EDT Wednesday.

Liubov Georges can be reached at liubov.georges@dtn.com

(BAS)

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