Crude Achieves Monthly Gain But Expectations Higher Than Ever For U.S./China Trade Deal

Meanwhile, U.S. interest rates are cut again to bolster the economy: File Image/Pixabay

The ongoing tub of war between hope for a reconciliation between China and the U.S. at one end and worry over a weakening economy on the other weighed in favour of the latter within the crude trading community on Thursday, with modest losses for both benchmarks inspired by weak factory data from China.

News that factory activity shrank for a sixth straight month in October while growth in the country's service sector was its slowest since February 2016 caused Brent to decline 38 cents to $60.23 per barrel, while West Texas Intermediate crude fell 88 cents to $54.18.

Trading was also impacted by the disclosure that TC Energy Corp's 750,000 barrels per day (bpd) crude pipeline from Cushing, Oklahoma, to Nederland, Texas, was operating at reduced rates - the outcome of a leak in the system that will presumably dent supplies at Cushing.

All but forgotten by traders was Wednesday's promising news that the U.S. Federal Reserve cut interest rates for a third time this year, which may bolster economic growth as well as crude demand.

That said, Thursday's trading activity contributed to WTI eking out its first monthly gain since July, albeit by an anemic  0.2 percent (Brent incurred a monthly loss of 0.9 percent).

Now, all eyes are on the trade talks between China and the U.S.: Ashley Petersen, senior oil market analyst at Stratas Advisors, said, "We have to keep an eye on the trade deal; this is going to be a problem from the rest of the year so there's going to be more inter-week volatility to come."

On that score, a summit in Chile both countries were scheduled to attend was cancelled due to violent protests; U.S. president Donald Trump said a new location will be announced soon.