Oil Holds Above $48
(Bloomberg) -- Oil held gains after its longest rally in almost 1 1/2 years on optimism the world’s two largest economies would reach a trade deal and an American crude build-up might slow.
Futures in New York were little changed following six days of gains, the longest winning streak since July 2017. There’s a “very good chance” the U.S. gets a reasonable deal with China, Commerce Secretary Wilbur Ross told CNBC Monday, as trade negotiations began in Beijing. Meanwhile, expectations for a nationwide decline in U.S. crude inventories alleviated worries about a supply glut.
Crude’s taking a respite after closing the worst year since 2015 on fears of oversupply and weakening global growth. Prices are rebounding as the Organization of Petroleum Exporting Countries and its allies start their pledged production cuts this month, and after the U.S. Federal Reserve signaled a hold in its interest-rate hikes that had spurred risk aversion and volatility across global financial markets.
“There a confluence of factors helping -- a big driver is progress in trade talks and hopes that global growth will be supported,” said Stephen Innes, head of trading for Asia Pacific at Oanda Corp. “Fed’s easier stance and OPEC’s commitment to cut production as well as expectations that inventories should drop are lending a hand to this positive investor sentiment.”
West Texas Intermediate for February delivery increased as much as 44 cents to $48.96 a barrel on the New York Mercantile Exchange, and traded 2 cents higher at $48.54 a barrel at 7:45 a.m. in London. Prices rose more than 8 percent for six sessions up until Monday.
Brent for March settlement gained 8 cents to $57.41 a barrel on the ICE Futures Europe Exchange in London. The contract closed 0.5 percent higher at $57.33 on Monday. The global benchmark crude traded at an $8.55 a barrel premium to WTI for the same month.
Investor confidence grew as the trade talks showed signs of progress. President Xi Jinping dispatched one of his top aides to negotiations in Beijing, while his counterpart Donald Trump has given U.S. Trade Representative Robert Lighthizer until March 1 to negotiate an accord. The current round of talks are scheduled to continue through Tuesday, with more senior-level discussions likely this month.
Meanwhile, American crude stockpiles probably declined by 1.75 million barrels last week, according to a median estimate in a Bloomberg survey of analysts ahead of government data on Wednesday. Nationwide inventories are near their lowest level in almost two months.
--With assistance from Tsuyoshi Inajima.To contact the reporter on this story: Sharon Cho in Singapore at firstname.lastname@example.org To contact the editors responsible for this story: Pratish Narayanan at email@example.com Heesu Lee
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