Oil slips as concerns over trade talks drag on

U.S. oil prices fell for the second straight day amid market jitters over limited progress between China and the United States on rolling back trade tariffs, while expectations of a rise in U.S. inventories also jangled nerves.

West Texas Intermediate (WTI) crude CLc1 dropped 32 cents or 0.56% to $56.73 a barrel by 0803 GMT, slipping further away from an eight-week high hit last Friday when hopes for the trade deal rose. Brent crude futures LCOc1 were down 26 cents, or 0.42%, at $62.18 a barrel. A Chinese government source was quoted by broadcaster CNBC as saying there was gloom in Beijing about prospects for a trade deal, with Chinese officials troubled by U.S. President Donald Trump's comment that there was no agreement on phasing out tariffs.

"We had reports overnight that the mood in Beijing was pessimistic," said Michael McCarthy, chief market strategist at brokerage CMC Markets in Sydney.

"The lack of announcement is really concerning for the demand outlook ... the market is very nervous about the trade talks."

The lingering trade battle that has seen the world's two biggest economies impose tit-for-tat tariffs on each other has hit global growth prospects and clouded the outlook for future oil demand.

Meanwhile, a preliminary Reuters poll that showed U.S. crude oil stockpile are expected to rise for a fourth straight week also squeezed prices.

"Unless we get further concrete signs of global growth rally or an extension in production cuts by OPEC+ ( the Organization of the Petroleum Exporting Countries and associated producers including Russia), WTI will struggle to attempt to recapture the $60-a-barrel mark," said Edward Moya, senior market analyst at OANDA in New York.

One possible factor supporting prices going forward was a renewal in geopolitical tensions, with news from Dubai that armed members of Yemen's Iran-aligned Houthi movement had seized a vessel towing a South Korean rig at the southern end of the Red Sea over the weekend.

Meanwhile, OPEC's share of India's oil imports fell to 73% in October, its lowest monthly share since at least 2011, tanker data from sources showed, as refiners shipped in fuel from the United States and other suppliers.

India, which usually imports about 80% of its needs from members of the Organization of the Petroleum Exporting Countries (OPEC), has been diversifying its sources of oil as local refiners have upgraded plants to process cheaper crude grades.

India, the world's third-biggest oil importer, shipped in 4.56 million barrels per day (bpd) of oil in October, about 3.3% less compared with a year ago, data showed. Of that, it bought 3.43 million bpd from OPEC.

OPEC's share of India's imports in September was about 81% although total volumes were lower, as the South Asian nation cut imports to a three-year low due to maintenance at some refineries.

OPEC oil output dipped to an eightyear low in September after attacks on Saudi oil plants led to production cuts, a

Reuters survey showed. The kingdom's output has since recovered.

In October, Iraq replaced Saudi Arabia as India's top oil supplier, tanker arrival data showed, with refiners cutting purchases of the more expensive Saudi oil.

Sources who supplied the data asked not to be named.

"Saudi had raised its official selling price (OSP). That led to some buyers migrating to Iraqi and other producers," said Ehsan Ul Haq, an analyst with Refinitiv.

Saudi Arabia raised its October OSP for its Arab Light grade for Asia by $0.60/barrel compared to a $0.35/barrel increase in Iraq's Basra Light.

To make up for lower Saudi purchases, India also boosted purchases from Nigeria, its third-biggest supplier in October, as well as from Kuwait and Mexico.

India shipped in a record 336,000 bpd of U.S. oil in October, about 7.5% of total imports, as private refiner Reliance Industries bought three tanker cargoes, data showed. The United States was Indian's fourth-biggest supplier in October.

"Indian demand for gasoil has been falling but overall Asian demand has been relatively strong because of new marine fuel rules from January. And good diesel cracks is prompting refiners to buy distillate rich crudes like that of Nigeria," Haq said. Refining margins or cracks for 10 ppm gasoil traded at $15.46 per barrel over Dubai crude during Asian trade. Cash premiums for the fuel climbed to 34 cents per barrel to Singapore quotes, compared with 31 cents per barrel on Friday.