However, the crude market is cautiously optimistic moving forward: File Image/PixaBay
U.S. president Donald Trump signing a bill into law backing protesters in Hong Kong may be supportive of human rights, but it was hardly supportive of crude prices on Thursday, as traders viewed the move as potentially rekindling hostilities with China and quashing the long-awaited trade agreement between the two countries.
As a result, Thursday's crude trading session was mixed after a week of gains: Brent lost 14 cents to settle at $63.92 per barrel, and West Texas Intermediate rose 13 cents to settle at $58.24.
Shortly after Trump declared his support of the pro-democracy protesters, China warned that it would take "firm countermeasures" in response to the legislation, and this caused Hussein Sayed, chief market strategist at FXTM, to state, "The approval of the Hong Kong legislation backing protesters is likely to put the trade agreement into question as China has reiterated its threat of retaliation.
Phil Flynn, senior market analyst, Price Futures Group Inc.
The overall economic feelings [in the U.S.] are pretty good
"If investors suspect that the trade agreement is under real danger, expect to see a sharp sell-off in December; for now, investors are taking a wait-and-see approach."
Still, sentiment in the crude market is one of cautious optimism, to the degree where Phil Flynn, senior market analyst at Price Futures Group Inc., suggested that earlier sell-offs were premature: "The overall economic feelings [in the U.S.] are pretty good and that should see improved demand going forward."
Meanwhile, anticipation is building for next week's meeting of the Organization of the Petroleum Exporting Countries (OPEC), in which it is widely expected the cartel will extend its production cuts from March until at least mid-2020.
However, it seems unlikely the cartel will deepen its cuts, and for its part Russia oil companies proposed on Thursday not to change their output quotas either.
Ravil Maganov, first vice president of Lukoil, told reporters after a meeting on the subject, “Everybody proposed we remain in the deal with the same parameters, and meet again in the end of the first quarter for further discussions.”