While the MOFCOM’s brief statement did not offer details on what had been discussed during the phone call, an expert close to the trade talks said that topics may have include tariff removals, agricultural purchases, a review mechanism for the implementation of a potential agreement as well as arrangements for a face-to-face meeting.Still despite the positive signs, some Chinese experts stressed that China will stick to its core demands, including proportional removal of existing tariffs and a balanced text of the phase one trade agreement.
“The ball is in the US’ court,” said the expert close to the trade talks who spoke on the condition of anonymity.
There was a call between the main players Monday night (USTR Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He) so at least talks are continuing toward some type of announcement. Still no word on exactly when such an announcement would take place.
Bloomberg out with a piece citing that high US production levels are due to keep prices in check. The drilled- but- uncompleted (DUC) wells count had fallen for a fifth month in October as producers draw on the the DUC’s inventory to cut costs and capital outflows. This is how US crude production managed to hit a record high this month even as the rig count fell to its lowest level since March 2017. See chart below:
The rationale is that the ‘drilled-but-uncompleted’ wells cost less to complete than digging a brand new well. So, as US producers complete the DUC backlog it means more supply comes live and this will keep prices capped as producers work through the DUC inventory backlog.
