Oil Rises on Signs of Trade-Talks Optimism, Key Hub Drop

Oil held gains near $58 amid growing optimism about prospects for a settlement in the long-running U.S.-China trade war

Jacquelyn Melinek

27 Nov 2019, 11:09 AM IST

Oil Rises on Signs of Trade-Talks Optimism, Key Hub Drop

Workers collect samples of crude oil in bottles at a multiple well platform in an oilfield near Nizhnevartovsk, Russia (Photographer: Andrey Rudakov/Bloomberg)

(Bloomberg) -- Oil rose on signs of progress in trade talks between the U.S. and China.

Futures were little changed in New York after settling 0.7% higher Tuesday. Washington and Beijing “reached consensus on properly resolving relevant issues” to pursue a “phase one” trade deal during a phone call on Tuesday, China’s Ministry of Commerce said. The American Petroleum Institute reported that U.S. stockpiles at a key hub fell 516,000 barrels last week, according to people familiar.

“The general sense is that the economy is doing good,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “There is a little bit of movement toward the U.S.-China trade deal, but the market is reflecting the strength we see in stocks and overall optimism.”

Crude has been rising since early October on the thaw in trade hostilities between the world’s two largest economies, although investors are becoming increasingly fatigued over how long the negotiations are taking. Traders are also concerned that OPEC and its allies seem unwilling to cut production further when they meet next week, despite signs of a renewed surplus in early 2020.

“The optimism that the trade conflict will at least ease somewhat is currently preventing prices from falling,” said Carsten Fritsch, an analyst with Commerzbank AG in Frankfurt.

West Texas Intermediate for January delivery traded at $58.28 at 4:42pm after rising 40 cents to settle at $58.41 a barrel on the New York Mercantile Exchange.

Brent for January settlement climbed 62 cents to end the session at $64.27 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark traded at a $5.86 premium to WTI.

The industry-funded API also reported that US. crude supplies rose by 3.64 million barrels. Meanwhile gasoline inventories grew 4.38 million barrels and distillate inventories fell by 665,000 barrels.

Analysts surveyed by Bloomberg said nationwide inventories probably fell by 878,000 barrels. That would still be near the highest level since July as the country’s oil output keeps rising.

“Optimism linked to the U.S. Chinese trade discussions, the likely extension of OPEC+ agreement and increased utilization rates should provide support to crude structure,” said Tom Finlon, director of Energy Analytics Group Ltd in Wellington, Florida.

Other market news
Gasoline futures rose 1.8% to settle at $1.7047 a gallon. Abu Dhabi is planning to put as much as $1.5 billion into Saudi Aramco’s initial public offering, as the oil giant taps friendly neighbors to prop up a deal that’s so far failed to draw foreign investors, people with knowledge of the matter said. Companies that help keep Mexico’s faltering oil wells operating are waiting months to get paid and the debts are building up, complicating efforts to revive an industry whose production has plunged by half since 2004. Russian Energy Minister Alexander Novak plans to meet the nation’s oil executives on Thursday to discuss the OPEC+ agreement, two people familiar with the plan said on condition of anonymity because the agenda isn’t public

Other market news

Gasoline futures rose 1.8% to settle at $1.7047 a gallon.
Abu Dhabi is planning to put as much as $1.5 billion into Saudi Aramco’s initial public offering, as the oil giant taps friendly neighbors to prop up a deal that’s so far failed to draw foreign investors, people with knowledge of the matter said.
Companies that help keep Mexico’s faltering oil wells operating are waiting months to get paid and the debts are building up, complicating efforts to revive an industry whose production has plunged by half since 2004.
Russian Energy Minister Alexander Novak plans to meet the nation’s oil executives on Thursday to discuss the OPEC+ agreement, two people familiar with the plan said on condition of anonymity because the agenda isn’t public

To contact the reporter on this story: Jacquelyn Melinek in New York at jmelinek@bloomberg.net

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