Oil retreats from 7-week high on mixed trade-war signals

OIl retreated from a sevenweek high as investors weighed mixed signals on the progress of US-China trade talks, while worsening violence in Hong Kong damped sentiment across financial markets.

Futures fell as much as 1.2 percent in New York after gaining 1.9 percent last week. President Donald J. Trump said the trade talks were moving along “very nicely,” but he also described reports on how much the US was ready to roll back tariffs as incorrect. Hong Kong stocks led declines in Asia after police shot a protester on Monday morning amid street clashes.

Oil has rallied around 9 percent since early October as the world’s two largest economies moved closer toward a limited trade agreement, while data last week showed some signs of improvement in the US and Chinese economies. That optimism has been reflected in hedge-fund bets, with net-long positions on West Texas Intermediate (WTI) crude rising for a third straight week. Meanwhile, Wood Mackenzie ltd. said it sees a “pretty high chance” that Opec and its allies will slightly extend production cuts next month.

Investors remain hostage to the rapid shifts in the US-China trade negotiations, Stephen Innes, Asia Pacific market strategist at AxiTrader, said in a note. But it’s ultimately the economic data that matter and, on that front, things are improving, he said.

WTI for December delivery fell 57 cents, or 1 percent, to $56.67 a barrel on the New York Mercantile Exchange as of 7:10 a.m. in london. It finished up 0.2 percent on Friday at $57.24, the highest close since September 24.

Brent for January dropped 1 percent to $61.87 a barrel on the london-based ICE Futures Europe Exchange after climbing 1.3 percent last week. The global crude benchmark traded at a $5.20 premium to WTI for the same month.

There were signs last week that a first-phase US-China deal would include a tariff rollback, but Trump made clear on Friday that an agreement hasn’t yet been reached and that he wouldn’t eliminate all levies. There’s an expectation that new tariffs scheduled for December 15 won’t take effect as part of an initial deal, but a lot of levies remain in place. Bloomberg News