Oil Rises After U.S. Reaches Trade Deal in Principle With China
(Bloomberg) -- Oil rose, reversing the previous day’s decline, after the U.S. reached a trade deal in principle with China.
Futures gained 0.7% in New York Thursday. American negotiators have reached the terms of a phase-one trade agreement that now awaits President Donald Trump’s approval, a development that eases concerns about a global economic slowdown.
“It looks like we may have the miracle of a trade deal after all, though I still think the U.S. will play some hard ball with China, so there’s still some uncertainty over the details of this,” said John Kilduff, a partner at Again Capital. “Beyond the deal, there’s definitely more of a bullish set up now given the OPEC+ deal and tensions in Iran and Iraq.”
The trade optimism overshadowed a jump in U.S. fuel inventories that weighed on prices Wednesday. American gasoline inventories surged the most since January as overall product demand slumped to a three-year low, and crude stockpiles increased, according to the U.S. Energy Information Administration.
Last week, the 24 producers in the OPEC+ coalition -- led by Saudi Arabia and Russia -- agreed to a package of cutbacks amounting to 2.1 million barrels a day. Still, deeper production cutbacks announced by the group won’t prevent a surplus in early 2020, the International Energy Agency said.
West Texas Intermediate for January delivery rose 42 cents to settle at $59.18 a barrel on the New York Mercantile Exchange. Volatility for WTI futures is at the lowest since May.
Brent for February settlement rose 48 cents to $64.20 a barrel on the London-based ICE Futures Europe Exchange, after falling 1% to close on Wednesday. The global benchmark crude traded at a $5.14 premium to WTI for the same month.
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