Most commodities performed well on Monday, but crude oil was the exception, with futures falling more than 2% to erase much of last week’s gains after the U.S.-China trade deal announced last Friday came under question, creating more questions about crude demand.
After the White House announced last Friday that a tentative trade agreement was reached with China it turns out that negotiators aren’t quite done, with China reportedly asking for additional talks before they sign off on “phase one” of the trade agreement announced last Friday.
With a trade deal now questionable, crude demand has also come under question, particularly as several organizations have recently downgraded demand projections.
At the close of trade on the New York Mercantile Exchange the U.S. benchmark West Texas Intermediate crude for November delivery fell by $1.11, or 2%, to settle at $53.59 a barrel. Prices gained last week to end at a two-week high on Friday, gaining 3.6% for the week.
Tensions remain high in the Middle East after an Iranian oil tanker was struck by two missiles last week. Iran has blamed Saudi Arabia for the attack, but the Saudi government has denied any involvement.
Back in Saudi Arabia oil production has returned to near-normal levels following the September attacks on Saudi Arabia’s oil infrastructure. With the disruption to supplies rectified for the time being markets are hesitant to place any risk premium on crude prices.