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China Cancels Trade Meeting, OPEC May Raise Production by 500K

James Hyerczyk
China dropped a potential bombshell late Friday when it canceled planned trade discussions with the United States. Gold prices edged lower on Friday as the U.S. Dollar firmed on renewed concerns over escalating trade tensions between the United States and China. A report showed OPEC and its allies were considering a coordinated increase in crude production.

Just when you thought it was safe to go back into the water, China dropped a potential bombshell late Friday when it canceled planned trade discussions with the United States as both sides escalate their dispute in the wake of a new round of tariffs imposed early last week.

After President Trump placed 10 percent duties on $200 billion of goods and China retaliated with tariffs on $60 billion in U.S. products, the two economic powerhouses planned to meet in order to dial back tensions, but according to The Wall Street Journal, China rescinded a proposal to send two delegations to Washington.

Despite the cancellation of the meeting, the United States is optimistic about finding a way forward in its trade dispute with China, but it does not have a date scheduled for further talks as it assesses Beijing’s response to the latest round of tariffs, a senior White House official said on Friday.

“We have been very clear in all of these meetings about what is… required,” the official said. “I am still optimistic that there is a positive way forward, and the president wants us to continue to engage to try to achieve a positive way forward.”

The official, speaking to reporters at the White House on condition of anonymity said, “Our goal here is not to cleave off the Chinese market from the U.S. market, I don’t think that’s good for long-term growth,” he said. “In the short term there is a course of risk that if China continues on the path it is, that some companies as a result of this may start… to move supply chains.”

Gold – Renewed Trade Tensions Pressure Prices

Gold prices edged lower on Friday as the U.S. Dollar firmed on renewed concerns over escalating trade tensions between the United States and China. The dollar’s status as the chief reserve currency makes the U.S. currency the prime beneficiary of concern over trade conflicts on bets that the United States has less to lose from the dispute.

Gold was also pressured by expectations of a Fed rate hike on Wednesday, September 26. After its two-day meeting, the central bank is widely expected to raise benchmark interest rates by 25 basis points.

Crude Oil – OPEC Meeting Could Lead to Increase of 500,000 Barrel a Day

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures settled higher on Friday, but off its highs after a report showed OPEC and its allies were considering a coordinated increase in crude production.

Citing an unnamed source, Reuters reported that the 15-nation OPEC cartel and a group of non-OPEC producers led by Russia are discussing a potential increase of 500,000 barrels a day.

Additionally, this weekend, OPEC will hold a producers meeting in Algeria, where it is scheduled to discuss allocating a production increase announced in June.

Prior to the new Reuters report, traders were saying it was highly unlikely that Sunday’s meeting in Algiers would produce a major policy decision.

President Trump turned up the heat on Saudi Arabia to do something about rising crude oil prices. The Saudi’s face a major challenge because they want to appease Trump, but at the same time maintain the cohesion among the other oil producers.

It’s a small amount, but a 500,000 barrel increase may be just enough to satisfy Trump and still prevent the other producers from being hurt by lower oil prices. If the increase comes to fruition then gains could be gapped. It’s probably not enough to drive prices into support.

This article was originally posted on FX Empire

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