Oil steady on weak demand concerns despite US-China trade optimism

Oil prices were little changed Tuesday as lingering worries over a global economic slowdown that could hurt oil demand offset some signs of progress in US-China trade talks.

Brent crude oil futures were down 6 cents, or 0.1 percent to $58.90 a barrel by 0309 GMT, while US West Texas Intermediate (WTI) crude futures were flat at $53.31 per barrel.

US President Donald Trump on Monday said efforts to end a US trade war with China were going well as negotiators from the two nations work to nail down a Phase 1 trade deal text for their leaders to sign next month when they meet at November's APEC summit.

"Commodity markets were cautiously optimistic amid signs that a trade deal was close to being signed by the United States and China," ANZ bank said in a note.

"Crude oil prices remained in the doldrums, with ongoing economic weakness weighing on sentiment," it added.

Brent has fallen 22 percent from its April peak, while WTI is down 20 percent.

Although there are some signs of easing tensions between the world's two largest economies, US Commerce Secretary Wilbur Ross said on Monday that an initial trade deal doesn't need to be finalised next month, emphasising the need to get the right deal.

Adding to tensions, China is seeking $2.4 billion in retaliatory sanctions against the United States for non-compliance with a WTO ruling in a tariffs case dating back to the era of President Barack Obama.

"In the short term, a possibility of the United States and China signing an initial deal could support prices, but it remains to see whether tariffs set for December will be removed," said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul.

Russia's missed target for cutting its September oil output was also putting downward pressure on prices, along with talks between Saudi Arabia and Kuwait to resume oil production from joint oil fields in the Neutral Zone, Kim said.

Russia, the world's second-largest oil producer, pumped more oil in September than it pledged under a global supply cut deal due to an increase in natural gas condensate output.

As well, US crude stockpiles are expected to have increased for a sixth straight week, while distillates and gasoline stocks likely fell in the week to Oct. 18, a preliminary Reuters poll showed on Monday.