By Peter Nurse
Investing.com - Oil prices dipped Wednesday, consolidating after recent strong gains while traders remain wary of heightened Sino-U.S. tensions.
At 9:25 AM ET (1325 GMT), U.S. crude futures traded 2% lower at $33.66 a barrel. The international benchmark Brent contract fell 2.1% to $35.41.
These prices have rebounded strongly this month, as the Organization of the Petroleum Exporting Countries and producers including Russia, a grouping referred to as OPEC+, cut their output by nearly 10 million barrels per day in May and then also June.
U.S. crude futures have more than doubled over the last month, while the Brent contract has posted gains of over 70%.
That said, investor sentiment has been soured by rising U.S.-China tensions, this time over the treatment of the semi-autonomous city of Hong Kong.
U.S President Donald Trump announced he will soon unveil the U.S. reaction to China’s national security laws for Hong Kong and Macau, while, in return, China threatened to retaliate against any U.S. actions, which could include sanctions.
Another trade war between the globe’s two largest economies could hit demand for oil just as it edges back in the wake of the global shutdown to combat the coronavirus.
Attention in the market is also starting to turn to the next OPEC+ meeting, which is currently scheduled for June 9-10.
Russia’s energy minister had a meeting with oil producers in the country in order to hear views around potentially extending deeper cuts into the second half of the year, Reuters reported.
“Given the strength we have seen in the market over the past month, and the expectation that demand will continue to recover in the coming weeks and months, this could also make Russia more reluctant to take further action than what has already been agreed,” said analysts at ING, in a note to clients.
Ahead of that, investors will get a measure of how U.S. stockpiles look when the American Petroleum Institute reports after the bell, a day late due to Monday’s holiday.
Seevol.com reported a 4.26-million-barrel decline for the week to May 22 at the Cushing, Okla. hub that stores crude delivered against expiring spot contracts of WTI.