Oil Getting Lift from US-China Trade, OPEC
(Bloomberg) -- Crude is poised for a second straight weekly advance as investors focus on talks between the U.S. and China on trade and as OPEC shows commitment to curbing production.
Futures added as much as 1.5 percent in New York on Friday to the highest in more than three months. U.S. President Donald Trump will meet with China’s vice premier and top trade negotiator on Friday and investors will eye the talks for any trace of progress on a potential deal. Even as U.S. crude production hovers at a record high, Saudi Arabia is showing it will cut output to help tighten markets.
In regards to a potential U.S.-China trade agreement, “there is certainly the expectation that it might occur in the not-too-distant future,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto. “Saudi Arabia has expressed that they are willing to cut supply to make sure the market is balanced.”
Oil has climbed this year as OPEC and its allies implement production cuts to help balance global markets. Saudi Arabia has cut deeper than it agreed to and has said it expects oil markets to balance by April.
“Saudi Arabia is delivering on the cuts it pledged, and I have no doubt they’ll deliver on pledges to do more,” said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB. “It was a production boost from OPEC and an equity sell-off that pushed oil down during the fourth quarter, and now as both of those elements are in reverse prices are going up.”
West Texas Intermediate for April delivery added 72 cents to $57.68 a barrel at 10:02 a.m. on the New York Mercantile Exchange. Futures have climbed 3.8 percent this week.
WTI crude is holding above its 100-day moving average after breaching the key level this week.
Brent for April settlement rose 49 cents to $67.56 a barrel on the London-based ICE Futures Europe exchange, and has advanced 1.7 percent this week. The global benchmark crude was at a $9.86 premium over WTI.
Trump’s meeting with Chinese Vice Premier Liu He was listed on the White House’s daily schedule for 2:30 p.m. in Washington. Liu and Trump met in late January when Liu was in Washington for a previous round of talks. As the discussions continued Thursday, reports emerged that negotiators are working on memorandums of understanding that would form the basis of a final deal.
--With assistance from Sharon Cho and Grant Smith.
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