Oil prices dropped on Monday as the first phase of a trade deal between the United States and China undercut last week’s optimism over a U.S.-China thaw that helped to lift crude markets by 2 percent at the end of last week.
Brent crude futures LCOc1 fell by 69 cents to 59.82 dollars a barrel by 0730 GMT, while U.S. West Texas Intermediate (WTI) crude futures CLc1 was at 54.09 dollars a barrel, down 61 cents.
Oil is slowly giving up its recent gains as mini-trade deal scepticism is growing,”
“Since it will take about a month to finalize this partial deal, traders are remembering that we have seen things fall apart in shorter time periods,” Edward Moya, senior market analyst at OANDA, said in an email.
The emergence of a phase one trade deal between the United States and China and a goodwill move by Washington to suspend threatened tariffs on Chinese products had initially lifted global financial markets on Monday.
But investors remained cautious given that few details emerged from the talks.
“This appears to be similar to past trade talks where the situation appeared rosy, before eventually crumbling down again,” Phillip Futures said in a Monday note.
The trade war has pressured China’s trade, with its exports to the United States falling 10.7 per cent from a year earlier in dollar terms over January-September, Chinese customs spokesman Li Kuiwen told reporters.