Oil price falls 1% on indecisive US-China trade talks, rising stocks

Morgan Stanley cuts 2019 oil price forecasts by more than 10%

LONDON: Oil prices fell about 1% on Thursday as no clear signs of a resolution emerged from US-China trade talks and official data again highlighted vast fuel stocks in the United States.

Brent crude LCOc1 was down nearly 1%, or $0.60, to $60.84 per barrel at 1400 GMT. US crude CLc1 was at $51.65 per barrel, down $0.71 or 1.4%.

Both benchmarks rose by around 5% the previous day, capping off a week-long climb that marked oil's longest sustained rise since last summer.



Vandana Hari of consultancy Vanda Insights in Singapore said oil prices dropped "as optimism fueled by the US-China trade talks earlier in the week appeared to have run its course."

Global financial markets had surged on hopes that Washington and Beijing may soon end their dispute and avert an all-out trade war between the two biggest economies.

But the upbeat mood was dampened after the two sides issued only mildly positive statements that lacked concrete details, helping end a four-day rally in share markets and pushing the US dollar to a near three-month low.



Elsewhere, US bank Morgan Stanley cut its 2019 oil price forecasts by more than 10% on Wednesday, pointing to weakening economic growth expectations and rising oil supply. The bank now expects Brent to average $61 a barrel this year, down from a previous estimate of $69, and US crude to average $54, against a prior forecast of $60.

The main source of new supply is the US, where crude oil production remained at a record 11.7 million barrels per day in the week ended January 4, the Energy Information Administration said on Wednesday.

Rising output has led to swelling fuel inventories and has countered efforts led by the Organisation of the Petroleum Exporting Countries (OPEC) to cut supply and rein in an emerging glut.

"We believe it is just a question of time that the actual or perceived supply-demand balance that includes stock level, production data as well as demand figure, will take over," said Tamas Varga of PVM Oil Associates.