Brent oil extended its longest rally in a year and a half, rebounding above $60 a barrel, on hopes of a resolution in the US-China trade dispute.
Futures in London -- which last traded over $60 in December -- are up for an eighth session, recovering from a 35 percent collapse in the last quarter of 2018. US President Donald Trump is said to be eager to strike a deal with China soon to perk up financial markets that have slumped on concerns over a trade war between the nations. Meanwhile, an industry report Tuesday was said to show American crude inventories declined.
Fears of a slowdown in oil demand are receding with an easing of the long-running trade tensions, which helped drag crude prices into a bear market after they hit a four-year high in October. Confidence is also strengthening that the Organisation of Petroleum Exporting Countries and its allies including Russia will curb output enough to counter booming US supplies and avoid an oversupply.
“There is further upside to come in prices, as we see more evidence coming through that members of OPEC+ are complying with their new production cut,” said Warren Patterson, senior commodities strategist at ING. “We see the market largely balanced over the first half of 2019.”
Brent for March settlement rose as much as $1.29, or 2.2 percent, to $ 60.01 a barrel and traded at $59.80 on the ICE Futures Europe Exchange in London as of 9:50am local time. The global benchmark crude was at a premium of $8.67 a barrel to West Texas Intermediate for the same month.
WTI for February delivery climbed $1.01 to $50.79 on the New York Mercantile Exchange, the first time it’s back above $50 since December 17.
US-China trade negotiations in Beijing have concluded after being extended by a day, showing both the sides are serious, according to a Chinese foreign ministry spokesman. The talks were originally scheduled for two days. Trump had earlier expressed optimism in a tweet, exclaiming “Talks with China are going very well!”
“Overall investor sentiment on risk assets is improving as the ongoing talks between the US and China ease uncertainties in the market,” Ahn Yea Ha, a commodities analyst at Kiwoom Securities Co, said from Seoul. “On the other hand, OPEC is signaling that it’s determined to clear a supply glut, which is also supporting crude prices.”
Meanwhile, the American Petroleum Institute was said to show crude stockpiles fell 6.13 million barrels last week. Still, the data also signaled substantial increases in American gasoline and diesel inventories, a bearish signal for demand. A government report on Wednesday is forecast to show crude inventories dropped 2.7 million barrels, though the hoard at the nation’s key storage hub may have increased.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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