(Bloomberg) -- Oil rose on signs of progress in trade talks between the U.S. and China.
Futures were little changed in New York after settling 0.7% higher Tuesday. Washington and Beijing “reached consensus on properly resolving relevant issues” to pursue a “phase one” trade deal during a phone call on Tuesday, China’s Ministry of Commerce said. The American Petroleum Institute reported that U.S. stockpiles at a key hub fell 516,000 barrels last week, according to people familiar.
“The general sense is that the economy is doing good,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “There is a little bit of movement toward the U.S.-China trade deal, but the market is reflecting the strength we see in stocks and overall optimism.”
Crude has been rising since early October on the thaw in trade hostilities between the world’s two largest economies, although investors are becoming increasingly fatigued over how long the negotiations are taking. Traders are also concerned that OPEC and its allies seem unwilling to cut production further when they meet next week, despite signs of a renewed surplus in early 2020.
“The optimism that the trade conflict will at least ease somewhat is currently preventing prices from falling,” said Carsten Fritsch, an analyst with Commerzbank AG in Frankfurt.
West Texas Intermediate for January delivery traded at $58.28 at 4:42pm after rising 40 cents to settle at $58.41 a barrel on the New York Mercantile Exchange.
Brent for January settlement climbed 62 cents to end the session at $64.27 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark traded at a $5.86 premium to WTI.
The industry-funded API also reported that US. crude supplies rose by 3.64 million barrels. Meanwhile gasoline inventories grew 4.38 million barrels and distillate inventories fell by 665,000 barrels.
Analysts surveyed by Bloomberg said nationwide inventories probably fell by 878,000 barrels. That would still be near the highest level since July as the country’s oil output keeps rising.
“Optimism linked to the U.S. Chinese trade discussions, the likely extension of OPEC+ agreement and increased utilization rates should provide support to crude structure,” said Tom Finlon, director of Energy Analytics Group Ltd in Wellington, Florida.
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