Oil rose to a six-week high as China and the U.S. made progress in resolving the protracted trade dispute that’s undermined demand for fuels to run trains, trucks and airplanes in the world’s two largest economies.
Futures climbed as much as 2.7% in New York on Thursday. Chinese and U.S. negotiators agreed to roll back tariffs in phases as they work toward a settlement. Two out of every three stocks in the S&P 500 Index advanced as investors embraced riskier assets.
The rise in oil and the stock market “linked to good trade news and economic optimism which should keep prices firm” for the day, said Tom Finlon, director of Energy Analytics Group Ltd in Wellington, Florida.
Oil still is down about 13% from its late April peak on concern that sluggish demand and swelling supplies from the U.S. and elsewhere will tip the market into oversupply. U.S. crude inventories surged by 7.9 million barrels last week, almost four times more than analysts forecast.
WTI for December delivery gained $1.19 to $57.54 a barrel at 12:15 p.m. on the New York Mercantile Exchange. Earlier, the futures touched $57.88, the highest intraday price since Sept. 24.
Brent for January settlement climbed 90 cents to $62.64 on the ICE Futures Europe Exchange. The global benchmark crude traded at a $5.12 premium to West Texas Intermediate for the same month.
“We are seeing a decent comeback in the oil market today after the positive trade news,” said Jens Naervig Pedersen, a senior analyst at Danske Bank A/S in Copenhagen. “The oil market is in a better state than two weeks ago, but we are still in a fragile environment, where it won’t take a lot to tip the scale in a negative direction again.”
Bullish sentiment was tempered by reports that the biggest crude producers in the OPEC+ group aren’t advocating for deeper supply cuts. Ministers from the Organization of Petroleum Exporting Countries meet in Vienna on Dec. 5 and 6.
© 2019 Bloomberg L.P.