Oil prices on ebb tide as gloom gathers over global economy

Brent Crude Oil

Crude oil prices down 23% from its 2019 peak

Brent crude rose by $1.09 a barrel to $59.46 on Monday, representing a 1.8% increase, while the US West Texas Intermediate (WTI) rallied by $1.06 to $53.87, up 2%. "Looking at the supply-demand balance, I think this market should be higher, but it's driven by sentiment".

Days before one of the highlights for oil this week-the new round of trade talks between the US and China-the United States placed 28 Chinese entities on a watch list over alleged "human rights violations and abuses in the implementation of China's campaign of repression, mass arbitrary detention, and high-technology surveillance".

The mood in financial and commodity markets is being dictated by the deterioration of prospects for a solution between the U.S. and China with respect to the trade dispute saga.

Brent crude LCOc1 fell 19 cents to $58.16 a barrel by 1035 GMT.

Traders are saying a surge in industrial metals, copper and aluminum, in London helped underpin crude oil on the notion the market was oversold in response to last week's reports on weakening manufacturing activity.

Oil prices drew some support from protests in OPEC members Iraq and Ecuador which threatened to disrupt their oil output.

On the supply side, deadly anti-government unrest has gripped Iraq, the second-largest producer among the Organization of the Petroleum Exporting Countries (OPEC).

Helping to generate a bearish tone in the markets are worries over the U.S.

All eyes are now on US-China trade talks this week where fresh efforts are anticipated to work out a deal. The decision appeared likely to draw a sharp response from Beijing, with investors anxious it might harm the chances of a breakthrough later this week.

"It remains to be seen whether a piecemeal approach would be acceptable" to President Donald Trump, she said.

He said potential attacks by Turkey on Kurdish forces in northeast Syria could take place close to the Iraqi border, leading to "a refugee crisis that puts pressures on Kurdistan's economy" and its oil production.

US stocks tumbled on Tuesday and the pan-European STOXX 600 index snapped a two-day winning streak to lose 1 per cent.

"There's some optimism and there's some short-covering". US crude inventories likely climbed for the fourth consecutive week last week, rising an estimated 2.6 million barrels, a preliminary Reuters poll showed. This will be the four straight week of increases.

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