CORRECTED-UPDATE 9-Oil prices rise as OPEC mulls deeper output cuts

(Corrects type of cuts in headline to "output" instead of
"demand.")
* China says progress made in trade talks with United States
* U.S. crude stockpiles seen higher for sixth week - poll
* Goldman Sachs lowers 2020 demand growth outlook to 1.3 mln
bpd

By Jessica Resnick-Ault
NEW YORK, Oct 22 (Reuters) - Oil prices rose on Tuesday
after China signaled progress in trade talks with the United
States and OPEC and its allies mulled deeper production cuts,
but gains were capped by forecasts of a buildup in U.S. crude
stockpiles.
Brent crude oil LCOc1 settled up 74 cents, or 1.3% at
$59.70 a barrel, while U.S. West Texas Intermediate crude CLc1
was 85 cents, or 1.6%, higher at $54.16 per barrel.
OPEC and its allies plan to consider whether to deepen cuts
to crude supply when they next meet in December due to worries
about weak demand growth in 2020, sources from the oil-producing
club said. Traders said the possible supply cut pushed prices higher,
but gains were muted as the market contended with concerns about
demand.
Washington and Beijing have made progress in trade talks,
China's Vice Foreign Minister Le Yucheng said, and problems can
be resolved as long as both sides respect each other.
"While the encouraging mood across financial markets will
remain stimulated by trade optimism, risk aversion could still
make an abrupt return should talks drag on or turn sour," said
Lukman Otunuga, analyst at FXTM.
The International Monetary Fund last week forecast that
fallout from the U.S.-China trade war and trade disputes across
the world would slow global growth in 2019 to 3.0%, the weakest
in a decade.
Lower economic growth typically squeezes demand for
commodities such as oil.
Prices were also pressured by forecasts of a buildup in U.S.
crude stockpiles, and moved lower in post-settlement trade after
industry group the American Petroleum Institute said U.S. crude
stockpiles rose 4.5 million barrels in the week ended Oct. 18.
Inventory data from the U.S. Energy Information
Administration (EIA) is expected on Wednesday.
"Expectations that the API and EIA will report that U.S.
crude oil inventories increased by around 3 million barrels over
the last week certainly do not help sentiment," ING analyst
Warren Patterson said.
"These more visible stock builds, along with demand concerns
continuing to linger, suggest it is becoming increasingly more
difficult to see a sustained rally in prices ahead of the OPEC+
meeting in early December."
The Organization of the Petroleum Exporting Countries,
Russia and other oil producers, an alliance known as OPEC+, have
pledged to cut production by 1.2 million barrels per day (bpd)
until March 2020. The producers meet again on Dec. 5-6.
Russian Energy Minister Alexander Novak said U.S. oil
production is likely to peak in the next few years as current
oil prices are capping the pace of expansion. The brisk pace of U.S. production, now the world's highest,
in the past few years has been a key factor behind the relative
weakness in oil prices. However, output has slowed recently.

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