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Oil slips as weak China exports highlight trade war impact

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Oil prices fell on Monday after data showed Chinese exports declined for a fourth straight month, sending jitters through a market already concerned about damage to global demand by the trade war between Washington and Beijing.

[NEW YORK] Oil prices fell on Monday after data showed Chinese exports declined for a fourth straight month, sending jitters through a market already concerned about damage to global demand by the trade war between Washington and Beijing.

Brent futures were down 15 cents, or 0.25 per cent, at US$64.24 per barrel by 12.29pm EDT (1629 GMT), after gaining about 3 per cent last week on news that Opec and its allies would deepen output cuts.

West Texas Intermediate oil futures were down 13 cents, or 0.24 per cent to US$59.07 a barrel, having risen about 7 per cent last week on the prospects for lower production from Opec+, which is made up of the Organization of the Petroleum Exporting Countries and associated producers including Russia.

Monday's sudden chill came after customs data released on Sunday showed exports from China in November fell 1.1 per cent from a year earlier, confounding expectations for a 1 per cent rise in a Reuters poll.

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Market voices on:

"That China trade data is a factor, certainly," said John Kilduff, a partner at Again Capital.

Washington and Beijing have been trying to agree a trade deal that will end tit-for-tat tariffs, but talks have dragged on for months.

"We're coming up to a bit of a precipice, with the potential for new tariffs to be slapped on Sunday, so this is going to be an intense week," Mr Kilduff said. Additional tariffs could weigh on the demand outlook for crude, he added.

Beijing hopes an agreement with the United States can be reached as soon as possible, China's Assistant Commerce Minister Ren Hongbin said on Monday.

Monday's declines also went against signs on Friday that China was easing its stance on resolving the trade dispute with the United States, confirming that it was waiving import tariffs for some soybean and pork shipments.

The price drop also put an end to a strong run in previous sessions fuelled by hopes for the Opec+ production curb deal.

On Friday, Opec+ agreed to deepen their output cuts from 1.2 million barrels per day (bpd) to 1.7 million bpd, representing about 1.7 per cent of global production.

"This decision crystallises an important shift in strategy to managing short-term physical imbalances rather than trying to correct perceived long-term imbalances through open-ended commitments," Goldman Sachs said in a note.

The bank revised its Brent spot price forecast to US$63 per barrel for 2020, up from a previous estimate of US$60.

BofA Merrill Lynch said in a note that strong compliance with the Opec+ along with positive economic developments such as a US-China trade deal could push Brent to US$70 a barrel before the second quarter of 2020.

REUTERS