Oil drops more than 1.5% amid doubts over US-China trade deal

Oil prices deepend losses as the US market opened on Friday, to drop more than 1.5% on profit-taking from a 6-week high, in addition to growing uncertainty over the first phase of the trade deal between the US and China, after news reports about a stiff opposition for the tariffs removal in the White House, in addition to US oversupply concerns after a massive surge in inventories and production levels remaining at its all-time highest levels.

WTI shed more than 1.5% to $56.07 a barrel from the opening of $57.01, with a session-high of $57.09, and Brent dropped 1.9% to $61.11 a barrel, from the opening of $62.31, with a high of $62.38.

Yesterday, WTI gained 1.2% and posted a 6-week high of $57.84, and Brent futures rose by 0.9% and posted the highest since September 24 at $63.28.

China's Ministry of Commerce stated on Thursday that the US and China agreed over the last two weeks to eliminate the tariffs imposed by the two countries during the long-running trade war. 

A US official confirmed the statements later, without disclosing a timetable for the removal phases, which may still be a hurdle between the two countries.

But the latest update regarding the matter on Friday is that the tariffs removal plan faces opposition in the White House and from outside advisers, according to Reuters quoted sources.

The sources added that the idea was not part of the October agreement between President Trump and Chinese Vice Premier Liu He.

These updates renewed doubts once again about the completion of the first phase trade deal, especially as China urged for removing the tariffs in order for Chinese leader Xi Jinping to formally decide the first phase.

It's widely expected that in case of the US-China trade war end by a final deal, the global economic outlook will likely improve in addition to oil demand.

The US Energy Information Administration (EIA) revealed on Wednesday that oil inventories rose by about 7.9 million barrels during the week ending in November 1, beating forecasts of 1.9 million barrels.

The total US commercial inventories rose to 447.2 million barrels, the highest level since the week ending in July 12, which indicates that domestic demand has weakened in the US, while the production levels remained unchanged from last week at its all-time record high of 12.6 million barrels per day.