Oil extends climb on OPEC cuts, hopes for trade thaw
Growing optimism over the U.S. economy fuels investor appetite for riskier assets EIA data showed U.S. inventories fell 0.5 million barrels in the week ended Friday.
Oil prices were higher Friday for a fifth straight session on optimism over a possible resolution to a U.S.-China trade fight.
But a bearish report on weekly U.S. oil and fuel inventories turned investors cautious, and some of oil’s earlier gains were reduced.
West Texas Intermediate futures, the U.S. oil standard, were up 2.4% at $48.20 a barrel on the New York Mercantile Exchange. WTI was more than 4% higher earlier in the session at a two-week intraday high of $49.20.
á Brent crude, the global oil benchmark, was up 2.2% at $57.18 a barrel on London’s Intercontinental Exchange.
Highlights U.S.-China Trade: China set a date for next week for a new round of talks with the U.S. to try to end a trade spat that has been looming bearishly over oil markets on concerns the global economy will slow and take oil demand down with it. Friday’s trade-talk news helped stock prices on Wall Street soar and recover much of Thursday’s steep losses. “Essentially we’ve got some hope in the market with regard to ongoing talks with China, coupled with the implementation of OPEC production cuts,” said Stephen Schork, editor of the energy trading newsletter the Schork Report.
U.S. Inventories: Data Friday from the U.S. Energy Information Administration showed U.S. crude oil inventories were virtually unchanged last week, but gasoline and distillate fuels bearishly surged by a combined 16 million barrels, while U.S. crude oil production remained at a record-high11.7 million barrels a day. Analysts said end-ofyear efforts by oil companies in Texas to shift around inventories for tax-accounting purposes may help explain the large jump in fuel stockpiles. “The report overall was extremely bearish,” said Kyle Cooper, a consultant at ION Energy. “But it is caveated by what is likely massive end of year tax issues that resulted in stocks movements that do not reflect true physical fundamentals.” Insight Shale: U.S. crude production, led by shale drilling, has continued to drive output to record highs, with the latest EIA monthly data—deemed more reliable than weekly numbers— showing a historic average of 11.53 million barrels a day last October. “More of the same is expected in the coming year,” said Stephen Brennock, analyst at brokerage PVM Oil Associates Ltd. He cautioned that U.S. oil growth posed a significant challenge to the ability of Organization of the Petroleum Exporting Countries and its allies to manage the market and boost prices. All the while that OPEC+ reduces output, the “U.S. oil patch nonchalantly continues to extend its recordbreaking run,” Mr. Brennock added. Ahead Baker Hughes releases data Friday at 1 p.m. on the number of rigs drilling for oil in the U.S.