Oil rose from a two-week low on a report that Saudi Arabia pledged to deepen production cuts. A tentative accord to prevent another U.S. government shutdown also reassured investors.
Futures climbed 2.3 percent in New York, after sliding on Monday to the lowest settlement since Jan. 28. Saudi Arabia will continue to cut its output more than required by the OPEC+ deal, going down to 9.8 million barrels a day next month, Energy Minister Khalid Al-Falih told the Financial Times.
Congressional negotiators said Monday in Washington they had reached a deal in principle on border security to avoid closure of the federal government.
“As if on cue, Saudi Arabia’s energy minister has injected a hearty dose of bullish impetus into the energy complex,” analysts at PVM Oil Associates Ltd. said in a report.
Crude’s rally had fizzled in February on concern the U.S. and China won’t be able to defuse their trade war. A strengthening dollar has also reduced the appeal of commodities priced in the currency. Prices have shown limited response to output reductions by the Organization of Petroleum Exporting Countries and its allies, as well as an escalating political crisis and sanctions against Venezuela.
West Texas Intermediate crude for March delivery rose $1.18 to $53.59 a barrel on the New York Mercantile Exchange at 8:56 a.m. local time. The contract fell 31 cents on Monday.
Brent for April settlement added $1.32 to $62.83 a barrel on the London-based ICE Futures Europe exchange, after falling 1 percent on Monday. The global crude benchmark traded at a $8.89 premium to WTI for the same month.
Senate Appropriations Chairman Richard Shelby said lawmakers agreed on all seven spending bills needed to keep government agencies open. The news spurred gains in European and Asian stocks on Tuesday as investors had been worried another partial shutdown would be a drag on U.S. growth.
Meanwhile, American and Chinese trade negotiators are meeting in Beijing this week to try and reach a deal before a March 1 deadline when higher American tariffs on Chinese imports take effect. President Donald Trump wants to meet Chinese President Xi Jinping “very soon,” White House adviser Kellyanne Conway said Monday on Fox News, an optimistic sign for investors who are becoming increasingly concerned there won’t be an agreement.
U.S. crude stockpiles are projected to rise for a fourth week, the longest such run since November, according to a Bloomberg survey before Energy Information Administration data due Wednesday. Inventories expanded by 2.4 million barrels in the week through Feb. 8, according to the survey.
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