Investing.com - Backlogged supplies are adding to demand worries for crude. .
New York-traded West Texas Intermediate crude was down almost 2% Monday, extending last week's near-5% slump after news of the closure of a crude processing unit at an Illinois refinery intensified concerns that U.S. crude stockpiles could build as gasoline works slowed.
London-traded Brent oil fell by about 1% as U.S.-China trade talks dragged without an immediate solution in sight.
The second-largest crude distillation unit at Phillips 66's (NYSE:PSX) Wood River refinery, which runs 330,000 barrels per day, was knocked out by a fire on Sunday.
Scott Shelton, energy futures broker at ICAP (LON:NXGN), also reported hearing issues at Phillips 66's Ponca City 76,000-bpd Oklahoma refinery, which processes crude flows from Cushing, Okla., the storage hub for WTI.
Weighing further on the outlook for U.S. crude prices was Friday's weekly rig count data showing a rise of 7 units after the previous week's drop of 15.
"It’s a perfect storm of bearish information for WTI," Shelton said.
WTI was down 88 cents, or 1.7%, at $51.84 per barrel by 12:20 PM ET (17:20 GMT). It lost 4.6% last week for its steepest weekly decline since this year began, despite intermittently scaling four-month highs of $55.75.
Brent, the global oil benchmark, was down 61 cents, or 1%, at $61.49 per barrel. It fell 1.2% after scaling 2019 highs of $63.63 earlier in the week.
After rallying with few stops since Christmas and into the first two weeks of this year on output cuts by Saudi Arabia and the Russia-led OPEC+10 group, crude prices have fallen into a one-step-forward-two-steps-back mode.
At Friday’s settlement, West Texas Intermediate crude still carried a 16% gain on the year, after a near-19% rise last month, the biggest ever for a January.
But the one-way trade oil bulls had relished through mid-January has disappeared, with modest gains and sharp falls more likely on any given day.
Stalemates in Venezuela’s power struggle and the U.S.-China trade war have hobbled the rebound, while global growth worries, creeping shale output and an abundance of crude barrels stuck at sea chipped away at this year’s market gains.
In Venezuela's case, opposition leader Juan Guaido's challenge against sitting leader Nicolas Maduro has devolved into a slow-motion crisis with no immediate resolution in sight. The sanctions imposed by the Trump administration on the Maduro-controlled PDVSA oil company has had limited impact on crude prices so far.
In China’s case, President Donald Trump said last week he did not plan to meet his counterpart Xi Jinping before a March 1 deadline that will likely raise tariffs from 10% to 25% on $200 billion worth of Chinese imports.
A new round of trade talks, however, began in Beijing on Monday, led by Deputy U.S. Trade Representative Jeffrey Gerrish and higher principal-level discussions featuring U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are due later this week.
Yet hopes for a quick resolution don't look too promising, with U.S. negotiators pressing China on longstanding demands, including reparations for alleged theft of U.S. intellectual property.