Investing.com – The oil market has bought Trump’s China deal more than the stock market has.
Crude futures hit three-month highs on Friday, with U.S. West Texas Intermediate breaching the $60 per barrel resistance long eyed by oil bulls and U.K. Brent crossing the key $65 milestone, after the Trump administration announced a trade deal with scant details.
On Wall Street, stocks fell from early highs in volatile trading as investors remained confused about signs of trade progress between the two countries after 17 months of tit-for-tat tariffs on hundreds of billions of dollars of imports and often acrimonious remarks that had weighed not just on their individual economies, but also world growth.
NYMEX-traded WTI, the U.S. crude benchmark, was up 80 cents, or 1.4%, at $59.98 per barrel by 12:51 PM ET (17:51 GMT). It earlier reached $60.45 per barrel, a level not seen since the September attack on Saudi Arabia’s oil facilities that briefly knocked out about 5% of world supply.
ICE-traded Brent, the global oil benchmark, was up 99 cents, or 1.5%, at $65.19, after a three-month high at $65.75.
For the week, WTI was up more than 1%, extending last week’s 7% gain that put it on track to a near-9% rise for December, its strongest month since June. Year to date, the U.S. crude benchmark has risen nearly 32%.
Brent gained 1% on the week, 4% on the month and 21% on the year.
“Oil is probably catching up after playing laggard to Wall Street, which had gone gung-ho in recent days on the hype over the likelihood of a trade deal,” said Adam Sarhan, chief executive at 50 Park Investments in Orlando, Florida.
“With stocks, it’s a classic case of buy-the-rumor-sell-the-fact. And that’s accentuated by the fact that there are scant details so far on this deal, and the devil is really in the details with something like this.”
In separate announcements, China and the U.S. said they had struck their long-awaited phase-1 deal, the first formal steps toward de-escalating a fight that has weighed on the world economy for a year and a half.
With no telecast of a physical signing ceremony, the two sides also created the notion of an announcement done for political expediency. President Donald Trump appears eager to announce as many wins as possible amid his impeachment inquiry in Congress, while China’s President Xi Jinping is under pressure to halt additional U.S. tariffs due on some $165 billion of Chinese imports beginning this weekend.
Indeed, Trump said he would not proceed with the new tariffs on China while the Office of the U.S. Trade Representative said the administration will be maintaining its earlier tariffs of 25% on about $250 billion of Chinese imports, along with 7.5% duty on about $120 billion of other goods.
Crude markets were also weakened by the Paris-based International Energy Agency’s monthly report that said global inventories could rise sharply through March despite an agreement by OPEC and its allies to remove as much as 2.1 million barrels, or 2.1% of global supply, each day.
OPEC, in its own monthly report this week, said it expected a small oil supply deficit instead for next year.