Skip to main content

Oil prices were mixed on Tuesday, paring earlier steep losses as investors focused on signs that U.S.-China trade tensions could ease next month and expectations that U.S. refined product stockpiles declined last week.

Brent crude settled at $61.59 a barrel, up 2 cents, after falling as low as $60.66. U.S. West Texas Intermediate crude ended 27 cents lower at $55.54 a barrel, after earlier hitting a session low of $54.61.

U.S. refined product inventories were seen declining last week as refinery runs remained relatively low. Gasoline stocks likely fell 2.2 million barrels, which would their fifth weekly drawdown, while distillates which include diesel and heating oil, were seen falling for a sixth week in a row, forecast to have dropped by 2.4 million barrels, according to a Reuters poll.

Story continues below advertisement

“The market is getting increasingly concerned about refined product inventories, and that’s supporting crude oil,” said John Kilduff, a partner at Again Capital LLC in New York. “U.S. refiners are operating at super-low capacity. They’ve had a rough year; there was no real rush to come back into service.”

U.S. refinery runs slowed down in September for seasonal maintenance, and were still low at around 85 per cent of total capacity in the week ended Oct. 18, according to the U.S. Energy Information Administration.

Strength in refined products prices, with U.S. gasoline futures nearly 1 per cent higher, was pulling crude higher despite forecasts that U.S. crude stocks rose 500,000 barrels last week, analysts said.

Low refinery runs “may be slightly bearish for crude in the short run, but should be wildly bullish for the products. If they don’t get going soon, we’ll have a shortage of supply,” said Phil Flynn, an analyst at Price Futures Group in Chicago.

The first of the weekly supply reports is due at 2030 GMT from the American Petroleum Institute (API), followed by EIA data on Wednesday.

Earlier in the sessions, prices fell on the forecast of the U.S. crude build while Russia’s deputy energy minister said it was too early to talk of deeper output cuts by OPEC and its allies, adding to the pressure on the market.

The United States and China were continuing to work on an interim trade agreement, but it may not be completed in time for U.S. and Chinese leaders to sign it in Chile next month, a U.S. administration official said.

Story continues below advertisement

The clarification of previous White House statements, that U.S. President Donald Trump and Chinese President Xi Jinping were expected to sign “phase one” of the trade deal, stymied oil market optimism that had reversed earlier losses and lifted U.S. equities.

But signs of tension between the United States and China after a nearly 16-month trade war are still fluid and have had an outsized impact on crude prices. Market participants believe the trade war has spooked investors and slowed global economic growth, crimping oil demand.

“After equities went green, crude oil found a bid and has rallied from the lows,” said Robert Yawger, director of energy futures at Mizuho.

Oil prices “have been supported by the earnings season on Wall Street and the expectation that the U.S. and China will sign a preliminary, phase-one trade deal,” said Andy Lipow, president of Lipow Oil Associates in Houston.

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies