By Barani Krishnan
Investing.com - China's cooling economy and its elusive trade deal with the U.S. are turning into twin albatrosses around OPEC's neck.
New York-traded West Texas Intermediate crude and London's Brent oil struggled to remain in positive territory on Tuesday on enthusiasm over Saudi-led production cuts amid news that China had targeted slower growth for 2019, without a resolution to its trade war with the United States.
WTI settled down 3 cents at $56.56 per barrel, retreating from a session high of $57.19. The U.S. crude benchmark has struggled to make much headway after a near-3% slide on Friday despite being up about 25% on the year.
Brent, the global oil benchmark, was up 24 cents to $65.91 per barrel by 2:38 PM ET (19:38 GMT). For the year, Brent is up 22%.
Traders will be on the lookout for a snapshot of what last week's supply-demand in oil could have been in data due from the American Petroleum Institute at 4:30 PM ET. Analysts expect the U.S. Energy Information Administration to report an official stockpile build of 1.2 million barrels for the week ended March 1, versus the previous week's surprise decline of 8.6 million barrels.
Stocks on Wall Street were mixed after China said it was targeting gross domestic product growth of 6% to 6.5% in 2019, down from the 6.6% reported last year. Beijing has also cut taxes to stimulate growth among manufacturers and increased infrastructure investment.
The news came after stocks had run out of steam Monday, despite reports suggesting a trade deal between the U.S. and China is in sight.
The lack of detail on negotiations between Chinese trade officials and the Trump administration also triggered worries there may not be proper closure to tensions between the world's two largest economies. President Donald Trump has withheld raising further tariffs planned on Chinese goods from March 1 while asking Beijing to lift duties on U.S. agricultural products -- a request that has not yet been approved.
Those long on oil say OPEC's production cuts will be all that's needed to keep crude prices up and that China-related fears of a slowdown were overstated.
"The doom and gloom the bears have priced in has far exceeded the reality of a slowdown in China and underestimates China’s commitment to cut taxes and do what it can to keep the Chinese’s people working," said Phil Flynn, senior energy analyst at The Price Futures Group in Chicago.
Goldman Sachs also said it expects OPEC to succeed in clearing excessive oil supplies in the market by the time the 15-member cartel meets in April with Russia and nine other allies under its market rebalancing group called OPEC+.
But others remained skeptical that it will be a one-way trade in oil hereon.
"OPEC is capable of delivering a tight market with shallow supply deficits that would pull the market in backwardation, with prompt oil’s price premium over later deliveries further drawing down inventories and easing the remaining surplus. But OPEC must contend with significant factors outside its control that could disrupt its best-laid plans," New York-based Energy Intelligence said in a note.