Oil Extends Winning Streak on Saudi Supply Cuts, Trade Optimism
Oil has rallied around 23 percent this year as the OPEC and its allies curtail output.
(Bloomberg) -- Oil closed higher for a fifth session as fresh evidence of OPEC production cuts tempered concern about the economic damage from global trade standoffs.
Futures rose 0.9 percent on Tuesday in New York, reaching their highest point since mid-November. A U.S. government official said trade talks with China were accelerating as a March 1 deadline approaches, even as the European Union vowed a swift response if America targets automobile imports. On the supply side, Saudi Arabia is slashing crude exports.
Even as U.S. prices gained on Tuesday, Brent, the global benchmark, slipped for the first time in six days. Oil has rallied more than 20 percent this year as the Organization of Petroleum Exporting Countries and other big exporters curtail output. Still, signs of slowing economic growth and record U.S. crude production have weighed on sentiment.
Investors “are focusing more on the trade talks right now,” said Scott Bauer, chief executive officer of Prosper Trading Academy in Chicago. “But we know all it takes is one tweet or one headline to turn that around, so I don’t think that volatility is going to go away any time soon.”
West Texas Intermediate for March delivery, which expires Wednesday, rose 50 cents from Friday’s closing price to $56.09 a barrel on the New York Mercantile Exchange. Monday’s transactions were booked Tuesday for settlement because of the U.S. President’s Day holiday. The more-active April contract gained 47 cents to $56.45.
Brent for April settlement edged down 5 cents to $66.45 on the London-based ICE Futures Europe exchange. The contract was at a $10 premium over WTI for the same month.
While high-level meetings in Beijing last week made little obvious progress, U.S. President Donald Trump called them “very productive” and has said he’s willing to delay additional tariff increases as long as there’s movement toward a “real deal.” Chinese trade negotiators headed back to Washington for more talks starting Tuesday.
Tanker tracking firm Kpler estimated Saudi oil exports fell to 6.2 million barrels a day in the first half of this month, lower than the 6.9 million indicated by Energy Minister Khalid Al-Falih for March. It’s less likely the kingdom will be able to revive shipments, given production at its largest offshore field Safaniyah is curtailed, Kpler said.
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--With assistance from Sharon Cho.
To contact the reporters on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net;Grant Smith in London at gsmith52@bloomberg.net
To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Catherine Traywick, Joe Carroll
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