Oil Climbs to Level Last Seen After Saudi Attacks in September

Oil extended its second weekly advance after Trump signed off on the terms for an in-principal trade deal with China.

Robert Tuttle

16 Dec 2019, 04:52 AM IST

Oil Climbs to Level Last Seen After Saudi Attacks in September

Flames burn from gas venting pipes on the oil platform (Photographer: Angel Navarrete/Bloomberg)

(Bloomberg) -- Oil settled above $60 a barrel for the first time since missile strikes on Saudi Arabia sparked a record price surge three months ago.

Futures closed 1.5% higher in New York on Friday, buoyed by a partial truce in the U.S.-China trade war that has imperiled demand all year. Chinese officials said the countries agreed to hold off on a new round of tariffs set to go into effect in a matter of days. The bullish momentum was undermined when U.S. President Donald Trump tweeted that existing levies will remain in effect.

“The market has just priced in this outcome to a certain extent already,” Daniel Ghali, a TD Securities commodity strategist, said by phone. “The hope is that a trade deal will translate into more demand.”

Until Friday’s session, crude was poised to end the week little changed after surging more than 7% last week on the strength of a surprise OPEC supply cut. Money managers boosted bullish bets on crude by the most in more than three years in the days before the trade deal was struck.

See also: Commodities Enjoy Best Week in 5 Months as Trade Deal Struck

“Risk appetite among financial investors is now likely to remain high thanks to the deal between the U.S. and China,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. Yet “the oil market risks facing a massive oversupply and a pronounced inventory build, at least in the first half of the year.”

West Texas Intermediate for January delivery rose 89 cents to settle at $60.07 a barrel on the New York Mercantile Exchange. Brent for February settlement advanced $1.02 to $65.22 on the London-based ICE Futures Europe Exchange. The global benchmark settled at a $5.24 premium to WTI for the same month.

Other oil-market news:
Gasoline for January settlement rose 3.49 cents to settle at $1.6632 a gallon. Moody’s Investors Service has a sunny outlook on the global oil and gas industry heading into next year, even as volatile energy prices hammer the sector and add to a mountain of debt. The three big oil forecasting agencies all see OPEC producers needing to comply fully with output cuts they agreed in Vienna last week if they are to avoid big builds in inventories in the first half of 2020. But even that may not be enough, as demand estimates from two of them weaken again.

Other oil-market news:

Gasoline for January settlement rose 3.49 cents to settle at $1.6632 a gallon.
Moody’s Investors Service has a sunny outlook on the global oil and gas industry heading into next year, even as volatile energy prices hammer the sector and add to a mountain of debt.
The three big oil forecasting agencies all see OPEC producers needing to comply fully with output cuts they agreed in Vienna last week if they are to avoid big builds in inventories in the first half of 2020. But even that may not be enough, as demand estimates from two of them weaken again.

--With assistance from Catherine Ngai.

To contact the reporter on this story: Robert Tuttle in Calgary at rtuttle@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Joe Carroll