Oil Rises On U.S.-China Trade Talk Optimism

by Noah Browning
Wednesday, January 9, 2019

Oil prices climbed around 3 percent on Wednesday as the extension of U.S.-China talks in Beijing raised hopes that the world's two largest economies would resolve their trade standoff.

U.S. West Texas Intermediate (WTI) crude oil futures were at $51.36 per barrel at 1500 GMT, up $1.58, or 3.17 percent, the first time this year that WTI has topped $50.

International Brent crude futures were up $1.63, or 2.78 percent, at $60.35 per barrel.

Both crude price benchmarks added to Tuesday's 2 percent gains and have now been on the rise for eight straight days - their longest rally since June 2017.

"After a dreadful December for risk markets, crude oil continues to catch a positive vibe," said Stephen Innes at futures brokerage Oanda in Singapore, citing tensions between the superpowers which have cast a pall over the world economy.

The trade talks in Beijing were carried over into an unscheduled third day on Wednesday, amid signs of progress on issues including purchases of U.S. farm and energy commodities and increased U.S. access to China's markets.

"Talks with China are going very well!" U.S. President Donald Trump tweeted, without elaborating. State newspaper China Daily said on Wednesday that Beijing was keen to put an end to its trade dispute with the United States, but that any agreement must involve compromise on both sides.

Stephen Brennock, analyst at London brokerage PVM Oil, warned against excessive optimism.

"Buyers have placed all their betting chips on the US and China resolving their trade spat," he said.

"A failure to secure a meaningful breakthrough in the coming days will therefore spark a turnaround in sentiment. It is also worth noting that the global economic outlook continues to darken," he added.

The World Bank expects global economic growth to slow to 2.9 percent in 2019 from 3 percent in 2018, it said in a semi-annual report released late on Tuesday.

More fundamentally, oil prices have been receiving support from supply cuts started at the end of 2018 by the Organization of the Petroleum Exporting Countries and allies including Russia.

The OPEC-led cuts are aimed at reining in an emerging supply overhang, in part because U.S. crude output surged by around 2 million barrels per day (bpd) in 2018 to a record 11.7 million bpd.

Official U.S. fuel storage data from the Energy Information Administration is due at 1800 GMT on Wednesday.

(Reuters, Reporting by Noah Browning and Henning Gloystein; Editing by Dale Hudson and Alexandra Hudson)

Categories: Government Update Shale Oil & Gas

Related Stories

Japan Protests China’s New Oil and Gas Construction Activities in East China Sea

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Yinson Production, “K” LINE Target Europe's CCS with FSIU and LCO2 Solutions

Yinson Production Closes $1B Investment to Drive Further Growth

Fugro Expands Geotechnical Testing Capabilities in Indonesia

UK Firm Secures Exploration Extension for Two Blocks off Vietnam

MODEC, Carbon Clean to Advance FPSO-Mounted Carbon Capture Tech

Aker Solutions, PTAS JV Hooks Brownfield Services Extension off Brunei

Azeri SOCAR Plans New Agreements with Oil and Gas Majors

Current News

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Japan Protests China’s New Oil and Gas Construction Activities in East China Sea

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Petronas Expands Suriname Portfolio with Deepwater Block Acquisition

Japanese Oil and Gas Firm Enters Two Blocks off Malaysia

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com