Oil prices dropped from a two-month high on Friday due to uncertainty on the demands of oil futures. The market remains anxious of the prospect of a US-China trade deal and of the global economy.
These uncertainties are enough for major producers to likely extend production cuts. In the previous session of discussing the possibility of a tight crude supply, prices were raised.
Brent crude futures LCOcl had slipped 0.5%, or 30 cents, priced at $63.67 a barrel. West Texas Intermediate crude CLcl slid 0.6%, or 34 cents, at $58.24 a barrel.
“The key factor for the demand outlook for oil is the (US-China) trade negotiation currently going on,” Michael McCarthy, chief market strategist at CMC Markets and Stockbroking in Sydney said.
“With oil near the top of recent trading ranges it’s no surprise to see a bit of selling pressure during the session today.”
Oil prices had their peak since September when the Organization of the Petroleum Exporting Countries and its allies including Russia (OPEC+) were reported to likely extend production cuts until mid-2020.
Oil was also kept steady by news from Chinese commerce ministry saying that China will strive to come up with an initial agreement of the deal with US. This will effectively bring an end to the 16-month trade war. However, the trade deal’s first phase could be finalized by next year.
In other parts of the world, traders keep an eye on oil production amid protests in Iran and Iraq.