SINGAPORE (Reuters) – Oil prices eased on Monday as small details about the first phase of a US-China trade agreement underpinned last week's optimism over the tin that helped lift crude markets by 2%.
FILE PHOTO: Oil rigs seen at Vaca Muerta shale oil and gas drilling, in Patagonian province of Neuquen, Argentina January 21, 2019. REUTERS / Agustin Marcarian / File Photo
Brent crude futures LCOc1 edged down by 25 cents to $ 60.26 barrel by 0436 GMT, while US West Texas Intermediate (WTI) crude futures CLc1 was at $ 54.45 barrel, down 25 cents.
Both contracts rose more than 3% last week, their first weekly gain of three.
"There is an argument that the US oil market trade on Friday already had a chance to price (i) the news of the trade conflict and better prospects for global demand," said CMC Markets chief strategist Michael McCarthy.
"So traders are reluctant to push it further given these very strong gains."
However, most of the gains made on Friday had come after an Iranian oil tanker was attacked off the coast of Saudi Arabia in the Red Sea. Investigations are underway to determine whether the tanker was hit by rockets, which could ease tensions between Tehran and Riyadh if confirmed.
The emergence of a US-China "Phase 1" trade agreement and Washington's willingness to suspend threatened tariffs on Chinese products also helped lift global financial markets on Monday.
But investors remained cautious given that few details emerged from the talks.
"Dealers see the deal in a tentative light … This baby-step deal may take several weeks to expire," said Stephen Innes, Asia Pacific market strategist at AxiTrader in a note.
The trade war has pushed China's trade, with exports to the US falling 10.7% from a year earlier in dollar terms January-September, Chinese customs official Li Kuiwen said.
China's imports from the US, on the other hand, have fallen 26.4% in dollars over the first nine months.
China's oil demand remains strong, but with September imports reflected a 10.8% year-over-year increase as refineries boosted production amid stable profit margins and solid fuel demand.
Reporting by Florence Tan; Additional reporting from Seng Li Peng; Editing Tom Hogue