Oil Extends Longest Rally in 1.5 Years
(Bloomberg) -- Oil rose back above $50 a barrel, extending its longest rally in 1 1/2 years as global risk assets were buoyed by the prospect of a thaw in trade tensions between the world’s biggest economies.
Futures in New York -- which last traded over $50 in December -- are up for an eighth straight session, rebounding from a collapse of almost 40 percent in the final quarter of 2018. U.S. President Donald Trump is said to be eager to strike a deal with China soon to perk up financial markets that have slumped on concerns over a trade war between the nations. Asian stocks on Wednesday followed a rally in the U.S. on investor optimism.
For oil bulls, the brightening economic outlook provides some comfort after fears that the long-running trade war will hurt demand helped drag prices into a bear market from a four-year high in October. Confidence is also strengthening that the Organization of Petroleum Exporting Countries and its allies including Russia will curb output enough to counter booming U.S. supplies and avoid an oversupply.
“Overall investor sentiment on risk assets is improving as the ongoing talks between the U.S. and China ease uncertainties in the market,” Ahn Yea Ha, a commodities analyst at Kiwoom Securities Co., said by phone from Seoul. “On the other hand, OPEC is signaling that it’s determined to clear a supply glut, which is also supporting crude prices.”
West Texas Intermediate for February delivery climbed as much as 88 cents, or 1.8 percent, to $50.66 on the New York Mercantile Exchange, the first time it’s back above $50 since Dec. 17. It was at $50.42 at 7:56 a.m. in London. Prices have advanced about 12 percent over the previous seven sessions, undoing almost half of 2018’s full-year loss.
Brent for March settlement rose 70 cents to $59.42 a barrel on the ICE Futures Europe Exchange in London. It’s jumped over 12 percent over seven sessions. The global benchmark crude traded at a premium of $8.69 a barrel to WTI for the same month.
U.S.-China trade negotiations in Beijing have been concluded after being extended by a day which shows both the sides are serious, according to a Chinese foreign ministry spokesman. The talks were originally scheduled for two days, and Trump had earlier expressed optimism in a tweet, exclaiming “Talks with China are going very well!”
According to people familiar with the matter, Trump’s willingness to cut a deal with Beijing is driven in large part by his desire for markets to rally. Developments in the negotiations remain a focal point at the same time as parts of the U.S. government are shut, with lawmakers unable to agree on a budget proposal. Trump delivered a televised address about his demand for a wall along the Mexican border, which is at the heart of the dispute.
Meanwhile, a post-market industry report was said to show crude stockpiles in the U.S. fell 6.13 million barrels last week. Still, the data also signaled substantial increases in American gasoline and diesel inventories, a bearish signal for demand. A government report on Wednesday is forecast to show crude inventories dropped 2.7 million barrels last week, though the hoard at the nation’s key storage hub may have increased.
--With assistance from Tsuyoshi Inajima.To contact the reporter on this story: Heesu Lee in Seoul at email@example.com To contact the editors responsible for this story: Pratish Narayanan at firstname.lastname@example.org Ovais Subhani
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