Oil Rises on Signs of Trade-Talks Optimism and Stockpile Drop

Flares As Natural Gas Tumbles After 'Momentum Killer' U.S. Storage Gain — Photographer: Bronte Wittpenn/Bloomberg

Oil rose on
signs of progress in trade talks between the U.S. and China, and estimates that American crude inventories retreated for the first time in five weeks.

Futures gained 0.4% to trade above $58 a barrel in New York. Washington and Beijing “reached consensus on properly resolving relevant issues” to pursue a “phase one” trade deal during a phone call on Tuesday, China’s Ministry of Commerce said. U.S. oil stockpiles fell by 878,000 barrels last week, according to a Bloomberg survey before official data due Wednesday.

“The general sense is that the economy is doing good,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “There is a little bit of movement toward the U.S.-China trade deal, but the market is reflecting the strength we see in stocks and overall optimism.”

WTI has been on a rising trend since early October

Crude has been rising since early October on the thaw in trade hostilities between the world’s two largest economies, although investors are becoming increasingly fatigued over how long the negotiations are taking. Traders are also concerned that
OPEC and its allies seem unwilling to cut production further when they meet next week, despite signs of a renewed surplus in early 2020.

“The optimism that the trade conflict will at least ease somewhat is currently preventing prices from falling,” said Carsten Fritsch, an analyst with Commerzbank AG in Frankfurt.

West Texas Intermediate for January delivery rose 24 cents to $58.25 a barrel on the New York Mercantile Exchange as of 12:39 p.m. local time. The contract advanced 24 cents to settle at $58.01 on Monday.

Brent for January settlement climbed 30 cents to $63.95 a barrel on the London-based ICE Futures Europe Exchange, after adding 0.4% on Monday. The global benchmark traded at a $5.71 premium to WTI.

U.S. crude inventories probably fell to 449.5 million barrels in the week through Nov. 22, according to the Bloomberg survey. That would still be near the highest level since July as the country’s oil output keeps rising.

“Optimism linked to the U.S. Chinese trade discussions, the likely extension of OPEC+ agreement and increased utilization rates should provide support to crude structure,” said Tom Finlon, director of Energy Analytics Group Ltd in Wellington, Florida.

Other market news
Gasoline futures rise 1.5% to $1.6991 a gallon. Abu Dhabi is planning to put as much as $1.5 billion into Saudi Aramco’s initial public offering, as the oil giant taps friendly neighbors to prop up a deal that’s so far failed to draw foreign investors, people with knowledge of the matter said. Companies that help keep Mexico’s faltering oil wells operating are waiting months to get paid and the debts are building up, complicating efforts to revive an industry whose production has plunged by half since 2004. Russian Energy Minister Alexander Novak plans to meet the nation’s oil executives on Thursday to discuss the OPEC+ agreement, two people familiar with the plan said on condition of anonymity because the agenda isn’t public

Other market news

Gasoline futures rise 1.5% to $1.6991 a gallon.
Abu Dhabi is planning to put as much as
$1.5 billion into Saudi Aramco’s initial public offering, as the oil giant taps friendly neighbors to prop up a deal that’s so far failed to draw foreign investors, people with knowledge of the matter said.
Companies that help keep
Mexico’s faltering oil wells operating are waiting months to get paid and the debts are building up, complicating efforts to revive an industry whose production has plunged by half since 2004.
Russian Energy Minister Alexander Novak plans to meet the nation’s oil executives on Thursday to discuss the OPEC+ agreement, two people familiar with the plan said on condition of anonymity because the agenda isn’t public

— With assistance by Grant Smith, and Ann Koh