Oil prices have edged up on expectations that the Organization of the Petroleum Exporting Countries (OPEC) and its allies that include Russia may deepen cuts at its meeting to be held on this week - Photo: Privacy

JAKARTA (TheInsiderStories) – United States (US) oil prices fell for the second straight day on Tuesday (11/18) amid market jitters over limited progress between China and the United States on rolling back trade tariffs, while rising US inventories also jangled nerves, Reuters reported.

West Texas Intermediate (WTI) crude reportedly dropped 27 cents or 0.47 percent to US$56.78 a barrel by 0549 GMT, slipping further away from an eight-week high hit last Friday when hopes for the trade deal rose. While Brent crude futures were down 20 cents, or 0.32 percent, at $62.24.

A Chinese government source was quoted by broadcaster CNBC on Monday as saying there was gloom in Beijing about prospects for a trade deal, with Chinese officials troubled by US President Donald Trump’s comment that there was no agreement on phasing out tariffs.

“We had reports overnight that the mood in Beijing was pessimistic. The lack of announcement is really concerning for the demand outlook, the market is very nervous about the trade talks,” said Michael McCarthy, chief market strategist at brokerage CMC Markets in Sydney.

The lingering trade battle that has seen the world’s two biggest economies impose tit-for-tat tariffs on each other has hit global growth prospects and clouded the outlook for future oil demand.

The global falls make Indonesian crude oils price (ICP) also weaken. The finance ministry noted that the average ICP during January-October 2019 was only around $62 per barrel. In fact, the government is designing the energy subsidy budget needs in the 2019 State Budget with the assumption that the ICP reaches $70 per barrel.

This makes the energy subsidy budget for new fuel oil used Rp58 trillion ($4.14 billion) or 57.7 percent of the ceiling. While the realization of electricity subsidy spending has only reached Rp40.5 trillion or 68 percent of the ceiling. In fact, in terms of growth, the use of the energy subsidy budget during January-October 2019 contracted 16 percent from the same period last year.

The realization is inversely proportional to last year which actually skyrocketed 77.3 percent from the previous year. Director-general of budget Askolani said the use of energy subsidies that was still quite minimal occurred due to crude oil prices on world markets that fell.

US$1=Rp14.000

Written by Lexy Nantu, Email: lexy@theinsiderstories.com