Signs of a trade lull between Beijing and Washington continue to put pressure on oil prices

Oil prices fell slightly amid signs of easing tensions between the United States and China, as traders took note of growing evidence that a long-awaited surplus is beginning to appear in the market. The price of Brent crude for December delivery fell by a factor to settle at $61.01 a barrel, while West Texas Intermediate crude settled unchanged near $57 a barrel, with investors changing positions this week ahead of the expiration of the November contract, adding volatility to trading. US President Donald Trump previously expressed his optimism about the possibility of reaching an agreement between the world’s largest oil consumers. Enthusiasm for this development was limited, however, as the quantities of oil stored on tankers rose to a new level, the highest yet, in one of the clearest indicators of the oversupply in the markets. Excess supply puts pressure on prices. Oil futures have fallen more than 20% since their peak in the summer, at a time when the OPEC+ alliance decided to increase production, while major institutions expect a heavy flow of supplies until next year. However, WTI crude earlier entered the oversold zone on the nine-day RSI for the first time since May, which could indicate that prices have fallen too quickly, and perhaps suggest the possibility of a recovery soon. Dennis Kessler, senior vice president of trading at BOK Financial, said: “Crude futures continue to trade cautiously amid indications that an oversupply is approaching.” He added that the price support for West Texas Intermediate crude is around $56.15, warning that closing below the $55 level could lead to a further decline in prices. Geopolitical pressure and Chinese economic decline Geopolitical factors are influencing price movement, as slow progress in de-escalating the war in Ukraine has added to pressure on the market, a scenario that could push oil to the $50 per barrel level, according to Citigroup estimates. US President Donald Trump said last week he would hold a second meeting with Russian President Vladimir Putin in an attempt to end the conflict, although previous talks have failed to reduce hostilities. Meanwhile, China’s economy slowed for the second straight quarter, hit by a drop in consumer and corporate spending, despite Beijing’s insistence that the annual growth target of around 5% is still achievable. Other indicators point to further weakness in the market as the time difference between the December and January contracts for US crude turned into a pattern for the first time since May, which is a bearish price pattern characterized by the narrower futures trading at a discount to the longer-term contracts. The spread between the two closest December contracts also turned into a bearish contango structure during October.