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.”

Oil Rises After U.S. Reaches Trade Deal in Principle With China

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.

Other oil-market news:
  • Sporadic clashes erupted in Algeria’s capital as authorities pressed on with a tightly controlled presidential election.
  • Saudi Aramco jumped again in its second day of trading, pushing the oil giant’s value beyond the $2 trillion mark sought by the kingdom’s Crown Prince.
  • Chevron Corp. and Total SA will invest $5.7 billion project in a Gulf of Mexico oil project, just days after the U.S. energy giant said it will take a massive writedown for assets including another Gulf platform.
  • Shippers have fewer than three weeks until new rules kick in forcing them to burn cleaner fuels, but the regulations are already redefining key trade routes in the global oil-product markets.

©2019 Bloomberg L.P.

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