Oil hovers near 3-month high on trade optimism, supply cuts
SINGAPORE: Oil prices trickled a fraction lower on Tuesday but remained near a three-month high as investors kept the faith with hopes that a fully fledged Us-china trade deal is in the pipeline and set to stoke oil demand in the world’s biggest economies.
Brent crude oil futures had slipped by three cents to $65.31 a barrel by 0122 GMT, while West Texas Intermediate crude was down 4 cents to $60.17 a barrel.
Under a partial trade agreement announced last week, Washington will reduce some tariffs on Chinese imports in exchange for
Chinese purchases of agricultural, manufactured and energy products increasing by about $200 billion over the next two years.
“While the partial trade deal leaves most of the tariffs in place, it marks a turning point in the dispute which will eventually lead to fully fledged agreement,” analysts from ANZ Bank said in a note on Tuesday.
JP Morgan and Goldman Sachs have revised their oil price forecasts for the next year upwards, with an Opec-led agreement to curb output further dovetailing with the improving trade outlook between the US and China.
Lower supply next year due to a planned cut by the Organisation of the Petroleum of Exporting
Countries (Opec) and associated producers like Russia — a grouping known as ‘Opec+’ — and stronger economic growth expected because of the improved trade outlook between United States and China will combine to tighten the oil supplydemand balance next year, analysts from JP Morgan said.
Also supporting prices, a preliminary poll ahead of reports from the American Petroleum Institute (API) and the Energy Information Administration (EIA) showed expectations that US crude oil inventories likely fell last week.
Lower supply next year due to a planned cut by ‘Opec+’ and stronger economic growth will combine to tighten the oil supply-demand balance next year