Last week, oil futures market prices fell amid reports that leading Organization of the Petroleum Exporting Countries (OPEC) producers won't be pushing for deeper production and supply cuts.
According to Rob Thummel, managing director and portfolio manager of Tortoise Capital, how investors conceptualize and react to OPEC oil supply cuts may be changing. "If that's the case," says Thummel, "along with the higher than expected build in oil, oil prices should continue to fall for the day."
Oil did go on to slide last Wednesday. For one, West Texas Intermediate (WTI) settled at $56.35 a barrel, falling 88 cents on the New York Mercantile Exchange.
In addition to influence by way of OPEC, the slide also occurred after concerns that there could be a delay in the U.S.-China trade deal, which relies on crucial meetings between President Donald Trump and President Xi Jinping. Oil rose again after the Wednesday drop following an announcement from the Chinese ministry of commerce on Thursday that the two countries have agreed to roll back and even cancel tariffs within an agreed upon timeframe.
That said, when it comes to a U.S.-China trade deal, "The crude market is much more skeptical," says Again Capital partner John Kilduff. "It's tough to surmount."
In a greater context, the U.S. had registered a petroleum trade surplus in September, the first in over forty years. Oil prices have been generally gaining since then, so Wednesday's dip could be viewed within that overall trend. Either way, considerations with OPEC production and trade with China all seem to have caused a stir in the market on Wednesday, which may point to change ahead depending on further announcements and speculation.
More definitive information about what's in store for oil supply cuts and the oil market in 2020 will likely become more transparent soon enough as OPEC is scheduled to meet again next month.