Oil climbs to six-week high on signs of trade war resolution
NEW YORK (Bloomberg) - Oil rose to a six-week high on mounting signs that a resolution to the U.S.-China trade dispute is imminent.
Futures advanced as much as 1.8% on Monday in New York. Chinese government officials are considering locations in the U.S. where leader Xi Jinping would meet U.S. President Donald Trump to sign a trade accord, people familiar with the plans said. The development may be the firmest signal yet that a truce is close at hand in the protracted trade war. U.S. stocks also surged.
Positive economic data and rising bullish sentiment among money managers contributed to the upward momentum in crude futures.
“We are revisiting optimism about a positive outcome for U.S.-China trade talks, amplified by speculative long positioning,” said Frances Hudson, global thematic strategist at Standard Life Investments in Edinburgh, Scotland. The more recent economic data suggests the threat of recession is receding, she said.
Despite two straight sessions of gains, futures still are down about 14% from a late April peak as the trade conflict between the world’s largest economies undermined demand for fuel to run trucks, cars, planes and trains. Among money managers invested in benchmark U.S. crude futures, net-long positions, or the difference between bullish and bearisg bets, rose 12% in the week ended Oct. 29, according to the U.S. Commodity Futures Trading Commission.
“Oil prices are dancing to the upbeat US-China trade tune,” PVM Oil Associates analysts Tamas Varga and Stephen Brennock wrote in a report. “A rally across global stock markets is acting as a boon for the energy complex.”
West Texas Intermediate for December delivery rose $0.73 to $56.93 a barrel at 10:20 a.m. on the New York Mercantile Exchange.
Brent for January settlement added $0.81 to $62.50 on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $5.48 premium to WTI for the same month.
Meanwhile, Saudi Arabia is taking measures to help ensure a successful public offering of shares in the kingdom’s oil company. Taxes on the company have been reduced, incentives have been unveiled to entice investors to hold onto their shares, and dividends may be increased.
