Oil held near a three-month high as industry data signalled a limited increase in American crude stockpiles and traders speculated that the U.S. and China are moving closer to a trade deal.
Futures were little changed in New York after the American Petroleum Institute was said to report a 1.26 million-bbl weekly gain in crude inventories. That’s less than half the 3.1 million-bbl jump forecast in a Bloomberg survey before government data due Thursday. U.S. and Chinese negotiators are working on multiple memorandums of understanding that would form the basis of a final trade agreement, according to a person briefed on the talks.
Crude has rallied about 25 per cent this year after the OPEC+ coalition got off to a strong start with their output cuts, led by higher-than-pledged reductions by Saudi Arabia, the world’s top oil exporter. Saudi Energy Minister Khalid Al-Falih said he expects markets to balance by April. Still, the trade war continues to cloud the global growth outlook.
“OPEC+’s strategy of implementing production cuts in order to remove the oversupply from the market and thus drive up oil prices has worked,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.
West Texas Intermediate for April delivery was down 0.2 per cent at US$57.02/bbl on the New York Mercantile Exchange at 8:39 a.m. local time. The March contract expired Wednesday after rising 83 cents to $56.92, the highest settlement since Nov. 12.
Brent for April settlement slipped 17 cents to $66.91/bbl on the London-based ICE Futures Europe exchange, after adding 63 cents on Wednesday. The global benchmark crude was at a $9.88 premium over WTI.
The API data also showed that gasoline inventories fell by 1.55 million bbls last week, while distillate stockpiles dropped by 758,000 bbls, according to people familiar with the figures.
The trade MoUs that the U.S. and China are working on would cover areas including agriculture, non-tariff barriers, services, technology transfer and intellectual property, the person with knowledge of the talks said. No breakthrough is expected during this week’s talks in Washington on major structural issues, but there’s an effort under way to potentially extend a March 1 deadline for U.S. tariffs to rise on Chinese goods.
© 2019 Bloomberg L.P.