U.S. Markets open in 7 hrs 24 mins

Oil Climbs on Optimism Around Potential U.S.-China Mini Deal

Jacquelyn Melinek
1 / 2

Oil Climbs on Optimism Around Potential U.S.-China Mini Deal

(Bloomberg) -- Crude jumped by the most in more than three weeks amid optimism over trade talks between the U.S. and China.

Futures rose 1.8% in New York on Thursday. The U.S. and China began two days of talks, with both sides signaling they may reach a partial deal that could lead to a temporary truce on tariffs. U.S. President Donald Trump said on Twitter Thursday: “Big day of negotiations with China. They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House.”

If a minor U.S.-China trade deal is reached to help set up a larger deal, “that would certainly be positive for expected demand for energy products,” said Michael Hiley, head of OTC energy trading with LPS Partners.

Still, there are lingering concerns in the market. Prices are lower than they were before the attacks on Saudi Arabia last month, with the kingdom quickly restoring production and investors turning their attention to the global economic slowdown. The protracted trade war is denting the demand outlook for oil, with the heads of major trading houses predicting prices in the $50s a year from now.

West Texas Intermediate for November advanced 96 cents to settle at $53.55 a barrel on the New York Mercantile Exchange, the highest level in more than a week.

Brent for December settlement rose 78 cents to end the session at $59.10 a barrel on the London-based ICE Futures Europe Exchange, and traded at a $5.54 premium to WTI for the same month.

Vice Premier Liu He and the rest of the high-level Chinese team arrived at the office of U.S. Trade Representative Robert Lighthizer at around 9 a.m. in Washington. President Donald Trump said in a Twitter post that he plans to meet with Liu on Friday.

The U.S.-China trade dispute has “cast a shadow” over oil demand and a failure to reach a deal would be “catastrophic” for the market Secretary-General Mohammad Barkindo said. OPEC and allies including Russia will do “whatever it takes” to prevent another oil slump as the global economy weakens, he also said.

--With assistance from Sheela Tobben and Alex Longley.

To contact the reporter on this story: Jacquelyn Melinek in New York at jmelinek@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Jessica Summers, Christine Buurma

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.