ADVERTISEMENT

Oil Stays Above $60 Mark on U.S.-China Trade Accord Optimism

Oil Near Three-Month High as Trade Optimism Balanced by Caution

Oil Stays Above $60 Mark on U.S.-China Trade Accord Optimism
The base prices of petrol and diesel will continue to be the global benchmarks. (Photo: iStock)

(Bloomberg) -- Oil edged higher to settle at a three-month high on optimism that a partial trade deal between the world’s two largest economies will spur demand for fuel to power trucks, trains, airplanes and cars.

Futures closed above the $60-a-barrel mark for a second straight session Monday in New York. Bullish bets rose the most in three years in the days leading up to Friday’s announcement that China will buy more American farm products. The deal is expected to be signed and released publicly in early January.

“Investors are still feeding off the news of the preliminary deal between U.S. and China,” said Michael Loewen, director of commodity strategy at Scotiabank in Toronto. The market also drew confidence from U.S. manufacturing and services data released earlier highlighting an already strong economy, Loewen added.

Oil Stays Above $60 Mark on U.S.-China Trade Accord Optimism

Although many of the tariffs imposed during the 20-month dispute will remain in place, the initial accord signals a thaw in U.S.-China relations. The optimism comes after deeper-than-expected production cuts announced earlier this month by OPEC and its partners.

WTI for January delivery rose 14 cents to settle at $60.21 a barrel on the New York Mercantile Exchange. The contract has gained about 9% this month.

Brent for February settlement was up 12 cents at $65.34 on the London-based ICE Futures Europe Exchange. The contract advanced almost 5% this month. The global benchmark was at a $5.20 premium to WTI for the same month.

Other oil-market news
  • Gasoline futures were little changed at $1.6627 a gallon.
  • One of the hottest trades this year across energy markets is proving one of the trickiest to profit from, making and breaking some of the biggest commodities firms around the world.
  • Citigroup expects that the production cuts agreed by OPEC and its partners will keep oil markets in backwardation, a price pattern signaling supply tightness.
  • An oil tanker was attacked on Sunday in West Africa’s Gulf of Guinea and most of its crew were kidnapped, the latest in a string of incidents highlighting the security risks to shipping in the region.

To contact the reporter on this story: Sheela Tobben in New York at vtobben@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Joe Carroll, Mike Jeffers

©2019 Bloomberg L.P.