Investing.com - The China factor is adding to the Santa Claus rally in oil.
Crude futures hit three-month highs on Thursday, responding to U.S. Treasury Secretary Steven Mnuchin’s remarks that the phase one trade deal will likely be signed in early January. Also boosting the market were Beijing’s early tariff waivers on six U.S. chemical and oil products.
NYMEX-traded West Texas Intermediate, the U.S. crude benchmark, settled up 33 cents, or 0.4%, at $61.18 per barrel. It earlier reached $61.40, its highest level since a mid-September closing high of $62.90. In the two weeks after that September peak, WTI tumbled, reaching $50.99 on Oct. 3. It has risen nearly 20% since.
ICE-traded Brent, the global oil benchmark, settled up 37 cents, or 0.6%, at $66.54. It earlier hit a three-month high at $66.78.
The United States is highly optimistic of signing by early next month the phase one trade deal with China, Mnuchin told CNBC on Thursday.
“It’s just going through what I would consider to be a technical, legal scrub, and we’ll be releasing the document and signing it in the beginning of January,” the Treasury secretary said.
The tariff waivers will apply to tariffs on chemical products metallocene high-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE), as well as refined oil products white oil and food-grade petroleum wax ahead of the phase one signing.
The exemptions will be for one year from Dec. 26, the Finance Ministry in Beijing said.
Talk of the imminent trade deal signing and tariff waivers have boosted feel-good trade in oil amid the pre-Christmas rally on Wall Street that has all but ignored Wednesday’s impeachment of President Donald Trump by the House of Representatives.
Trump became only the third president in U.S. history to be impeached as rival Democrats who control the House of Representatives found him guilty of abuse of power and obstruction of Congress after investigations concluding that he invited foreign meddling in the U.S. electoral process.
The president will have to face trial in the U.S. Senate but is unlikely to be removed from power as the higher legislative decision-making body is controlled by members of his Republican party, who have made it clear that they viewed his impeachment a sham.
Thursday's oil rally was also helped somewhat by Wednesday’s weekly oil dataset from the U.S. Energy Information Administration, which showed a drop in crude stockpiles in accordance with market expectation.