Oil Holds Near Three-Month High as U.S. Extends Truce With China
Oil has rallied about 26 percent this year as production curbs by OPEC and its allies eased concerns over a supply glut.
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(Bloomberg) -- Oil steadied near a three-month high in New York as a U.S. move to extend a trade truce with China raised hopes that the world’s two biggest economies would soon resolve a stand-off on tariffs.
West Texas Intermediate futures were little changed after settling at a three-month high on Friday. President Donald Trump said he’ll delay a tariff increase on Chinese goods that was set for March 1 after “substantial progress” in negotiations. Meanwhile, American drillers reduced the number of working oil rigs for the first time in three weeks.
“There is reason to be optimistic about the prospect of a trade deal over the short-term,” said Jens Naervig Pedersen, senior analyst at Danske Bank A/S in Copenhagen. “Demand should start to pick up as well and create a benign situation in the oil market with fundamental support both from tighter supply and stronger demand.”
Oil has rallied about 26 percent this year as OPEC and its allies cut production while a resolution in the trade war helps ease concerns over demand. Prices are set to gain further as the supply curbs and American sanctions on Iran and Venezuela have caused a shortage of heavy crudes that refiners rely on, said Russell Hardy, chief executive officer of Vitol Group, the world’s largest energy trader. Still, record U.S. shale flows threaten to cap gains.
West Texas Intermediate for April delivery rose 15 cents to $57.41 a barrel on the New York Mercantile Exchange at 10:46 a.m. London time. The contract added 30 cents to $57.26 on Friday, the highest close since Nov. 12.
Brent for April settlement increased 11 cents to $67.23 a barrel on the London-based ICE Futures Europe exchange, after gaining 5 cents on Friday. The global benchmark crude was at a $9.86 premium to WTI.
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Stocks in Europe and Asia advanced alongside U.S. equity futures after Trump said Sunday on Twitter that “the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues.” U.S. Treasury Secretary Steven Mnuchin said Friday that a leaders’ meeting is being tentatively planned for late March.
Oil rigs in the U.S. fell by four to 853 last week, according to oilfield-services provider Baker Hughes. Still, the latest data from the Energy Information Administration showed U.S. crude production rose to a record 12 million barrels a day in the week through Feb. 15. The agency forecasts average output will be 12.41 million barrels a year in 2019 and 13.2 million next year.
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To contact the reporters on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net;Grant Smith in London at gsmith52@bloomberg.net
To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Rakteem Katakey, Helen Robertson
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