Oil prices slipped just under 1 per cent on Monday as the market grew less optimistic about a quick resolution of the US – China trade war.  Anadarko photo.

Oil prices underpinned by OPEC supply cut

Oil prices fell slightly on Monday as the market grew less optimistic that there will be a quick resolution to the US – China trade war, overshadowing support from OPEC’s supply cut deal.

By 2:47 p.m., EST, benchmark Brent crude futures were down 60 cents to $61.50/barrel and US West Texas Intermediate futures dipped 33 cents to $52.39/barrel.

US – China trade talks resumed with working level discussions, and high-level discussions are set to continue later in the week.  Negotiators are working to ink a deal before the March 1 deadline when US tariffs on $200 billion worth of Chinese goods are scheduled to rise to 25 per cent from 10 per cent.

According to Reuters, Beijing struck a positive note concerning the talks, however, it also expressed anger about a US Navy mission in the South China Sea.

US President Donald Trump further dampened hopes of a timely resolution after he said on Thursday that he did not plan to meet with Chinese President Xi Jinping before the upcoming deadline.

Trade tensions between the two economic superpowers have cost both countries billions of dollars, disrupted global trade and business flows and left financial markets reeling.

“There’s a lot of uncertainty about what’s going on with this trade war, whether they’re going to get anything done,” Phil Flynn, oil analyst at Price Futures Group told Reuters. “You’ve got concerns about slowing growth.”

Despite trade concerns, OPEC’s supply cut agreement has helped underpin oil prices.  The deal between most OPEC countries and its allies, including Russia, began in January.  The group aims to cut 1.2 million barrels per day of production until the end of June in an effort to reduce the global oversupply of crude.

Suhail Al Mazrouei, Energy Minister of the United Arab Emirates, said on Monday the oil market should be balanced during the first quarter of 2019.

The cartel and its allies will meet in Vienna in April to review the agreement, but Reuters reports that the parties have so far fallen short of a new formal alliance.

US sanctions on the Venezuelan oil industry and Iranian crude exports have also buoyed oil prices.

Venezuela’s President Nicolas Maduro is looking to OPEC for support against the sanctions, arguing that the sanctions’ will impact oil prices and other cartel members.

According to a report by Reuters,Venezuelan Oil Minister Manuel Quevedo said the South American country is hoping to double its crude sales to India and is open to barter payment arrangements.