Oil Holds Largest Gain Since July on Trade War Hope
(Bloomberg) -- Oil held its biggest gain in almost two months as China’s announcement that it would send trade negotiators to the U.S. buoyed markets.
Futures in New York edged lower after jumping 4.3% Wednesday in the biggest advance since July 10. Chinese trade negotiators will head to Washington in early October for talks, the nation’s commerce ministry said in a statement Thursday. Crude surged Wednesday as the White House placed new sanctions on Iran, and Russia said it would keep to its OPEC+ output limits this month.
Fresh talks give some hope that the U.S. and China can tamp down their escalating trade conflict, although there are still clear differences on substantive issues. Oil is also being supported by an improvement in risk sentiment driven a concession to protesters from Hong Kong Chief Executive Carrie Lam and a reduced chance of a no-deal Brexit. Official U.S. crude stockpiles figures due Thursday may give the market fresh direction.
“Oil coat-tailed the overnight dialing down of global political tensions and the rotation out of defensive macro positioning,” Jeffrey Halley, a senior market strategist at Oanda Corp., said in a note. “Asia will probably be content to await direction from Europe and New York ahead of the official U.S. crude inventory data.”
WTI for October delivery declined 20 cents, or 0.4%, to $56.06 a barrel on the New York Mercantile Exchange as of 7:35 a.m. in London after swinging between gains and losses earlier. The contract surged $2.32 on Wednesday.
Brent for November settlement fell 12 cents to $60.58 a barrel on the ICE Futures Europe Exchange. The contract gained 4.2% on Wednesday. The global benchmark crude traded at a $4.68 premium to WTI for the same month.
U.S. crude inventories rose by 401,000 barrels last week, the industry-funded American Petroleum Institute reported Wednesday, according to people familiar with the data. The surprise increase pushed down prices slightly, although the impact was tempered by a drop in gasoline stockpiles. Nationwide inventories were forecast to have fallen by 2 million barrels in a Bloomberg survey of analysts before the official Energy Information Administration figures.
Vice Premier Liu He agreed to travel to Washington next month in a telephone call Thursday morning in Beijing with Treasury Steven Mnuchin and U.S. Trade Representative Robert Lighthizer, China’s commerce ministry said. A statement from the U.S. Trade Representative’s office confirmed that ministerial level talks will take place in “the coming weeks,” without specifying when.
On Iran, the U.S. hinted that more measures are coming after imposing new sanctions, while deflecting questions about French diplomatic efforts meant to help the Persian Gulf producer restart oil sales. That comes after Treasury Department placed new restrictions on a shipping network controlled by Iran’s Islamic Revolutionary Guard Corps earlier.
--With assistance from James Thornhill.
To contact the reporter on this story:
Sharon Cho in Singapore at firstname.lastname@example.org
To contact the editors responsible for this story:
Serene Cheong at email@example.com
Andrew Janes, Heesu Lee
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.