Oil prices increased on indications of easing trade tensions between the US and China, after Washington and Beijing agreed to hold high-level negotiations in October 2019.
Brent crude LCOc1 jumped $0.17 to $61.12 a barrel, while US West Texas Intermediate (WTI) crude futures CLc1 gained $0.16m to settle at $56.46 per barrel, Reuters reported.
Both Beijing and Washington agreed to hold high-level talks in October 2019 in Washington, giving hope to investors of an end to the trade war between the two biggest economies. The prolonged trade war has brought hike in tariffs.
The long-time dispute also had a huge effect on oil prices, although they have increased over 2019, with support offered by production cuts from the Organisation of the Petroleum Exporting Countries and its allies, which also includes Russia.
Phillip Futures Singapore commodities analyst Benjamin Lu was quoted by Reuters as saying: “Upside potential for crude oil futures will remain limited, however, as strong US production and demand-side concerns cap bullish gains for the current term.”
Citing ‘subdued economic momentum, global trade uncertainties and rising market risks’ Benjamin Lu said that US crude would range between $55 and $60 over the third quarter of this year.
Data released by the Energy Information Administration (EIA) highlighted a fall in the US crude and product inventories last week, with crude drawing down for a third consecutive week despite a rise in imports.
Crude inventories declined 4.8 million barrels to 423 million barrels, which is nearly double analysts’ expectations. This is said to be their lowest since October 2018.