Oil prices have remained near a three-month high on investors’ expectations that a fully fledged trade deal between the US and China is in the queue.
Brent crude oil futures had declined by $0.02 to $65.32 a barrel, while West Texas Intermediate (WTI) crude edged down $0.04 to $60.17 a barrel, reported Reuters.
The US will reduce some taxes on Chinese imports, as part of a partial trade agreement announced last week, in exchange for its purchases of US-based farm products and other goods by around $200bn over the next two years.
OANDA senior market analyst Edward Moya was quoted by Reuters as saying: “Oil prices are struggling to extend their gains as investors await further details regarding the US-China ‘Phase One’ trade deal.
“Oil should be much higher, but the US-China trade war is far from over.”
White House adviser Larry Kudlow said that the agreement would almost double the country’s exports to China.
Moya further added that demand for oil is expected to witness major improvements as US President Donald Trump is in the process of ensuring that the country’s growth remains robust before elections in November 2020.
A preliminary Reuters poll reported that crude stockpiles in the US likely declined last week. Meanwhile, investors are awaiting reports from the American Petroleum Institute (API) and the Energy Information Administration (EIA).
In a monthly forecast, EIA noted that US oil output from seven of the major shale formations is anticipated to increase about 29,000 barrels per day in January to 9.14 million barrels per day.