Oil prices drop, market anxious about slow progress in U.S.-China trade talks

U.S. oil prices dropped for two days in a row while the market is anxious on the doubted prospects of a trade deal between the U.S. and China. Trade talks between the two countries have resulted to limited progress as U.S. inventories continually rose.

West Texas Intermediate (WTI) crude fell 10 cents or 0.18% from an eight-week high, priced at $56.95 a barrel. Prices fell after the short news of a possible trade deal was shut down.

Brent crude futures dropped 0.19%, or 12 cents, priced at $62.32.

According to a source from the Chinese government that was quoted by CNBC, Beijing was pessimistic about the prospects of a trade deal, especially after U.S. President Donald Trump commented that there was no agreement to cut back tariffs.

“We had reports overnight that the mood in Beijing was pessimistic,” chief market strategist at CMC Markets in Sydney, Michael McCarthy said. “The lack of announcement is really concerning for the demand outlook…the market is very nervous about the trade talks.”

The 16-month old trade war between the world’s two largest economies has largely affected global growth and raised doubts on future oil demand.

“Unless we get further concrete signs of global growth rally or an extension in production cuts by the OPEC+, WTI will struggle to attempt to recapture the $60-a-barrel mark,” senior market analyst at OANDA in New York, Edward Moya said.