Oil falls on concerns over U.S.-China talks, weak economic data

Oil falls on concerns over U.S.-China talks, weak economic data”

Investors were cautious ahead of U.S.

"Renewed purchases of USA agricultural products by China in recent weeks has kindled hope that Beijing may secure a quid pro quo on parts of their trade" deal, said Vandana Hari, the founder of industry consultant Vanda Insights.

U.S. and Chinese officials meet in Washington on October 10-11 in a fresh effort to work out a deal, which U.S. President Donald Trump said his administration had a "very good chance" of achieving.

Brent crude futures edged down 1 cent to $58.36 a barrel by 0656 GMT, while U.S. West Texas Intermediate (WTI) crude was at $52.85, up 4 cents.

Brent for December settlement added 73 cents to $59.10 a barrel on the London-based ICE Futures Europe Exchange. "We are not ruling out a quick upward price reversal".

Oil fell again, erasing earlier gains, as economic tensions between the USA and China flared ahead of talks aimed at resolving their long-running trade feud.

US stocks tumbled on Tuesday and the pan-European STOXX 600 index snapped a two-day winning streak to lose 1 per cent.

US crude stockpiles increased by 3.1 MMbbl in the week ended September 27 to 422.6 million, according to Energy Information Administration data.

International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned that global economic deceleration could turn into "a more massive slowdown" without action to resolve trade conflicts and support growth. "Growing recession risks have capped the upside of oil prices".

"The market's focus remains on trade tensions and oil demand concerns, ignoring the elevated geopolitical tensions in the Middle East and lower OPEC production in September", said UBS oil analyst Giovanni Staunovo.

Crude inventories in the United States are expected to have grown for a fourth week while distillates and gasoline stocks are likely to have fallen, a Reuters poll showed on Monday.

USA stocks tumbled and the pan-European STOXX 600 index fell 1%. "The spectrum of potential price reactions is correspondingly large", said Carsten Fritsch, analyst at Commerzbank.

Iraq's oil exports of 3.43 million barrels per day (bpd) from Basra terminals could be disrupted if instability lasts for weeks, Ayham Kamel, Eurasia Group's practice head for Middle East and North Africa, said in a note.

"Any oil production disruption would have occurred when Saudi Arabia has lost a significant share of its energy system redundancies (spare capacity)", he said.

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