Crude advances as U.S., China close in on healing trade rift

LONDON (Bloomberg) -- Oil climbed as the U.S. and China were said to be near a settlement of a trade dispute that threatened to erode energy demand in the world’s largest economies.

Futures in New York rose as much as 2.2% on Monday. American and Chinese negotiators are close to signing an accord that would lift tariffs and usher in new intellectual-property protections, according to people familiar with the talks. Meanwhile, OPEC crude exports fell by almost 700,000 bpd last month, tanker-tracking consultant Kpler said in a report.

Oil has rallied about 25% this year as the Organization of the Petroleum Exporting Countries and allies such as Russia restrained production. Meanwhile, a pipeline closure threatened crude flows from Nigeria while American oil exploration shrank to the lowest level since May.

“Oil prices are taking their cues from a flurry of buying on global stock markets as the U.S. and China inch closer to ending their trade dispute,” analysts at PVM Oil Associates Ltd. said in a note to clients.

West Texas Intermediate for April delivery rose 95 cents to $56.75/bbl at 10:22 a.m. on the New York Mercantile Exchange, after earlier moving as high as $57.

Brent for May settlement rose 89 cents to $65.96 on the London-based ICE Futures Europe exchange. The global benchmark crude’s premium over WTI for the same month was at $8.95.

The number of rigs searching American fields for crude fell by 10 last week to 843, according to a Baker Hughes report. In the Permian basin, the most prolific U.S. field, the rig fleet shrank by seven to 466.

“There continues to be very strong support for oil prices on the back of OPEC reducing their production,” said Howie Lee, a Singapore-based economist at Oversea-Chinese Banking Corp. “Also, if the U.S. and China manage to resolve their key differences, then we can raise the oil demand a few notches. I think there is hope.”