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Oil prices drop on fears of oversupply

Oil prices drop on fears of oversupply

Oil prices dropped on Tuesday due to concerns over excess supply, and the risks of demand arising from tensions between U.S.A. and China, two of the world's largest oil consumers. This was despite President Donald Trump saying he expects to reach a deal.

Brent crude futures were down 14 cents or 0.2% at $60.87 per barrel at 0005 GMT. The U.S. West Texas Intermediate (WTI), which is due to expire Tuesday, fell 0.1% to $57.45. The December contract, which is more active, was down by 13 cents or 0.2% at $56.89.

Donald Trump, the U.S. president, said Monday that he expected to reach a fair deal with Chinese President Xi Jinping. The disagreements regarding tariffs, market access and technology are still unresolved before their meeting scheduled for South Korea next Monday.

"I believe we'll have a very good trade deal." "Both of us will be pleased," Trump said.

Ritterbusch and Associates stated in a report that the trading outlook for crude oil is bearish. They recommend selling at price increases rather than buying on pullbacks.

They added, "But we also feel there is enough geopolitical unrest to occasionally offset the oil balances which are becoming increasingly negative each week."

A preliminary poll conducted on Monday, before the weekly reports of the American Petroleum Institute (API) and the Energy Information Administration, showed that U.S. crude stockpiles probably increased last week.

A drone attack in Russia forced the Rosneft controlled Novokuibyshevsk Refinery to stop primary crude processing Sunday. Separately, an attack on the Orenburg Gas Plant forced Kazakhstan to reduce output at its Karachaganak Oil and Gas Condensate Field by 25 to 30%.

Trump has reiterated that India will face "massive tariffs" if it does not stop buying Russian crude. India is now the largest buyer of discounted Russian crude oil after Western sanctions against Moscow.

The International Energy Agency's bearish forecast last week, which predicted that the global oil market would face a surplus in 2026 of almost 4 million barrels a day as OPEC+ and its rivals increase production while demand is sluggish, has contributed to the fall. Ashitha Shivaprasad, Bengaluru. Sonali Paul, editing.

(source: Reuters)