Trump Admin Optimistic China Deal Can Be Brokered
October 22, 2019
President Donald Trump continued to speak optimistically about the possibility of a deal to end the US trade war with China. He told reports that the trade deal is coming along great. Last week, he stated that he hopes the first phase of the deal will be signed by the middle of next month. A US trade representative said that the key thing is to get everything right concerning the phase 1 trade deal prior to signing a deal. Another trade representative said there are outstanding issues to be resolved prior to the APEC meeting in Chile in November 16th. Tension on this front are still high and the market is a bit skeptical that it can make the November 16th target date. Adding to the tensions the fact that China want to obtain $2.4 billion in retaliation sanction against the US for non-compliance with a WTO ruling in a tariff case dating back to President Obama’s term.
Russia stated on Sunday that they did not comply with the oil output agreement with OPEC in September due to increased production in natural gas condensate for winter usage. Russia and other non-OPEC producers along with OPEC agreed to cut oil output by certain level each month adding up to a total of 1.2 million bpd in output cuts through 2019. This is a worrisome development out of Russia. There are some market analyst that think Russia has been out of compliance for a while and if that is confirmed or continues then that should put some selling pressure on prices.
US Defense Secretary, Mark Esper, said the Pentagon is considering keeping some US troops near oilfields in northeastern Syria alongside Kurdish-led Syrian Democratic Forces to help deny oil to Islamic State militants.
The official IRNA new agency reported that an Iranian tanker damaged in the Red Sea two weeks ago has entered Iranian territorial waters. The tanner will dock at Kharg Island in two days. Iran’s President, Hassan Rouhani, said last week that the tanker, the Sabiti, had been hit by at least two rockets.
The International Monetary Fund in its World Economic Outlook report said China’s economy could grow at 5.8% next year down from a 6.1% forecast for 2019. The IFM said world economic growth is forecast to rebound to 3.4% in 2020 after an anticipated slowdown to 3% this year from 3.6% last year due partly to uncertainties cause by the US-China trade war.