Crude Oil Futures Falter
Crude oil futures faltered Tuesday on the apparent lack of progress in trade relations between the world’s two largest economies, along with two individuals notably absent this week from a meeting of global elites.
February West Texas Intermediate (WTI) oil futures fell $1.23 Tuesday, settling at $52.57 per barrel. At one point during the session, the contract traded above the $54 mark – $54.24, to be exact. At the other end of the spectrum, the intraday low for the WTI was $51.80.
Brent crude for March delivery ended the day at $61.50 per barrel – a $1.20 decline.
“While OPEC wants all to stay focused on its production cuts, the demand side of the picture isn’t quite coming together for the cartel,” Barani Krishnan, senior analyst with Investing.com, told Rigzone. “Chinese and global economic data haven’t been comforting enough to continuously sustain the momentum of the crude rally.”
Optimists in the crude oil market are also eager for the United States and China to strike a trade agreement, noted Krishnan.
“The U.S.-Sino trade deal, for one, cannot happen quickly enough for the liking of oil bulls,” said Krishnan. “The U.S. isn’t biting Beijing’s $1 trillion trade offer because that will pan out over six years, and there appears to be very little instant gratification for Trump other than a headline. With the President skipping Davos, there’s even less of a chance of him announcing a trade deal with China before February.”
The event to which Krishnan was referring is the World Economic Forum Annual Meeting in Davos, Switzerland, that began Tuesday. Besides President Trump, a prominent Middle Eastern public official has decided not to attend the gathering – and that is weighing on the mood in the oil market as well, Krishnan noted.
“As a further drag on sentiment, we also have the Saudi energy minister giving Davos a pass,” remarked Krishnan. “Everyone had expected him and the Russian energy minister to huddle at the conference and give the OPEC cuts a tweak. These are the sort of constant, positive news-bites that will give traders and investors reasons for wanting to own more oil.”
The price of a gallon of reformulated gasoline (RBOB) moved in the same direction as oil futures. The February RBOB lost 5 cents, settling at $1.40.