Oil prices rose more than 1% on Thursday after U.S. President Donald Trump said Washington was “very close” to nailing down a trade deal with China.
Brent crude LCOc1 futures rose 76 cents, or 1.2%, to $64.48 a barrel by 1 p.m. EST (1800 GMT). West Texas Intermediate (WTI) crude CLc1 futures rose 68 cents, or 1.2%, to $59.44 a barrel.
Oil prices received a fresh boost after Trump’s tweet saying the United States was very close to a big deal with China amid reports that the country was considering a delay or possible cancellation of tariffs scheduled to go into effect on Dec. 15.
While prices received a fresh boost immediately following the tweet, futures eased somewhat during the session.
“It’s tough to draw a firm conclusion from the latest that came out,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut. “It seems to be close, but we’ve all been waiting for this deal to happen.”
The outlook for oil demand has been clouded by U.S.-China trade tensions and uncertainty over whether a fresh round of U.S. tariffs on Chinese goods would come into effect.
Trump was expected to meet with his top trade advisers on Thursday to discuss the Dec. 15 tariff deadline, sources told Reuters.
China’s commerce ministry said Beijing and Washington were in close communication, declining to comment on possible retaliatory steps if Trump imposes the extra tariffs.
Oil prices have firmed after OPEC and other producers including Russia agreed last week to rein in output by an extra 500,000 barrels per day in the first quarter of 2020.
The Organization of the Petroleum Exporting Countries said this week that it now expected a small oil market deficit in the next year, suggesting the market is tighter than previously thought.
By contrast, the International Energy Agency (IEA) predicted a sharp rise in global inventories despite the OPEC agreement, noting expectations for lower output by the United States and other non-OPEC countries.
Oil prices were also supported by the U.S. Federal Reserve keeping interest rates unchanged at a meeting on Wednesday.
The European Central Bank also kept its ultra-easy monetary policy unchanged on Thursday, even keeping the door open to more stimulus.
“While oil prices are trending higher benefiting from a dovish Fed, a weaker U.S. dollar, the IEA reiterates that despite the deeper oil production cuts, the oil market is likely to be oversupplied in 1H20,” said UBS oil analyst Giovanni Staunovo.
PUKmedia \ Reuters