Oil Rises Most in Two Weeks as Concerns Over Trade War Ease
(Bloomberg) -- Crude climbed the most in more than two weeks as concerns eased that the U.S. and China will engage in all-out trade war.
Futures jumped 2.2 percent in New York on Monday as equities rose and the dollar dipped, boosting oil’s appeal. While President Donald Trump predicted China will be first to buckle in the tug of war, his top economic adviser said the countries are holding “back-channel discussions” to resolve the dispute.
“We’ve got the U.S. dollar taking a bit of a correction,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto. At the same time, “I get the feeling that the narrative is going to shift here with the trade situation, where I think people are trying to walk back some of the more aggressive rhetoric that we’ve seen.”
Worries over the exchange of punitive tariffs between the U.S. and China added to concerns that oil is piling up at storage tanks in America’s biggest crude distribution hub in Oklahoma, and that production from shale fields is on a relentless rise to record levels. That led the U.S. benchmark crude to dip below $62 last week, after touching a high of more than $66 the week before.
West Texas Intermediate for May delivery climbed $1.36 to settle at $63.42 a barrel on the New York Mercantile Exchange.
Brent for June settlement rose $1.54 to end the session at $68.65 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $5.22 premium to June WTI.
The Bloomberg Dollar Spot Index declined for a second session, bolstering the appeal of commodities like oil as a store of value. The S&P 500 Index climbed as much as 1.9 percent.
Prices are rising amid “the realization that maybe the trade war isn’t going to kill energy demand anytime in the near future,” said Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago. “More than anything, oil prices are following the stock market back higher.”
Other oil-market news:
- Gasoline futures rose 1.5 percent to settle at $1.9842 a gallon on Monday.
- U.S. crude inventories probably fell by 1.38 million barrels last week: Bloomberg survey
- Stockpiles in Cushing, Oklahoma, probably increased by 2 million barrels last week, according to a forecast compiled by Bloomberg.
- Saudi Arabia signaled its intent to expand chemical production along the U.S. Gulf Coast and potentially double the size of North America’s biggest oil refinery.
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