Oil Up as Trade Tariff Rollback Counters OPEC Curbs
(Bloomberg) -- Oil rebounded after slumping for the first time in four days as signs of progress in the prolonged U.S.-China trade dispute offset indications the biggest OPEC+ producers aren’t seeking deeper output cuts.
Brent crude rose as much as 0.9% in London, reversing some of Wednesday’s 1.9% decline. China and the U.S. have agreed to proportionally roll back tariffs on each others goods in phases, a Chinese Ministry of Commerce spokesman said. OPEC and its allies are more likely to stick to their current output targets when the group meets next month, according to delegates across the coalition.
Oil is still down from an April peak as the trade spat between Beijing and Washington dented demand and as global supplies swelled. U.S. crude inventories surged by 7.9 million barrels last week, almost four times more than the median estimate in a Bloomberg survey.
“This is a very good starting point for both countries to come to a conclusion on phase one of a trade deal,” said Howie Lee, a Singapore-based economist at Oversea-Chinese Banking Corp. “The oil market however really needs to see both parties put pen to paper for prices to move substantially higher.”
Brent for January settlement climbed as much as 55 cents to $62.29 a barrel on the ICE Futures Europe Exchange, and traded at $62.16 as of 7:56 a.m. London time. The contract dropped $1.22 to $61.74 on Wednesday. The global benchmark crude traded at a $5.36 premium to West Texas Intermediate.
WTI for December delivery gained 41 cents, or 0.7%, to $56.76 a barrel on the New York Mercantile Exchange. The contract fell 88 cents to close at $56.35 on Wednesday, snapping a 5.6% gain over three days.
The amount of tariff relief that would come in the first phase, set to be signed in the coming weeks, would depend on the content of that agreement, spokesman Gao Feng said Thursday without giving further details. The two sides had “constructive talks” in the past two weeks, he said.
Russia’s Energy Minister Alexander Novak said on Wednesday that the market is rather balanced and a more than $60 a barrel price for Brent indicated that the situation is stable. Ministers from the Organization of Petroleum Exporting Countries meet in Vienna on Dec. 5 and 6.
--With assistance from James Thornhill.
To contact the reporter on this story:
Ann Koh in Singapore at email@example.com
To contact the editors responsible for this story:
Serene Cheong at firstname.lastname@example.org
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.