Oil rallies on renewed trade deal prospects before OPEC+ meeting
NEW YORK (Bloomberg) - Oil rose as the U.S. and China moved closer to a trade deal and before the OPEC+ alliance meets later this week to consider extending its output-cut policy.
Futures advanced as much as 2.8% in New York. The U.S. and China are closer to agreeing on the amount of tariffs that would be rolled back in a phase-one trade deal despite tensions over Hong Kong and Xinjiang, people familiar with the talks said. That came after U.S. crude inventories were reported to have fallen. The Organization of Petroleum Exporting Countries and its partners are set to meet in Vienna.
Oil has been rising since early October on optimism the U.S. and China are close to an initial deal. The likelihood that OPEC and its allies will extend production cuts and toughen compliance, together with some signs that they could deepen them, has helped to keep prices aloft this week.
“Overall we have seen an increased appetite for re-entering long positions but at this stage we maintain the view that Brent will struggle to break away from its low $60s range for the foreseeable future,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S. “The dump-and-pump action continues with trade-talk focus overshadowing news from Vienna.”
West Texas Intermediate for January delivery climbed $1.58, to $57.68 a barrel on the New York Mercantile Exchange as of 9:12 a.m. in New York. Brent for February settlement rose $1.65, to $62.47 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $4.83 premium to WTI for the same month.
People familiar with the trade talks said that U.S. President Donald Trump’s comments Tuesday downplaying the urgency of a deal shouldn’t be understood to mean the talks were stalling, as he was speaking off the cuff.
Analysts surveyed by Bloomberg expect the U.S. Energy Information Administration -- which will release data later Wednesday -- to report a 1.5-million barrel decline in U.S. crude inventories, according to the median estimate. That would be the first drop in six weeks.
