(Bloomberg) -- Crude climbed to the highest level in six weeks as investors remained optimistic that the U.S. and China are moving closer to signing a trade deal.
Futures rose 1.2% in New York on Tuesday. Prices held up after the American Petroleum Institute reported that U.S. stockpiles rose 4.26 million barrels last week, according to people familiar. China is reviewing locations in the U.S. where President Xi Jinping would be willing to meet his counterpart Donald Trump to sign the first phase of a trade deal, according to people familiar with the plans.
“The U.S. seems more willing to roll back existing tariffs and the fact that they’re talking about that and looking to get something done for this phase-1 deal is going to move oil,” said Josh Graves, senior market strategist at RJ O’Brien & Associates in Chicago. “If everything stays the course and nothing changes in regards to the trade deal, you’re going to continue to see buying interest in the market.”
Crude is still down about 14% from a peak at the end of April as the spat between Beijing and Washington has threatened the demand-growth outlook. In addition, OPEC cut its estimates for the amount of oil it will need to pump in the coming years, projecting that its share of world markets will shrink until the middle of the next decade amid a flood of U.S. shale supplies.
China is seeking to roll back U.S. tariffs on as much as $360 billion of Chinese imports before President Xi agrees to signing a partial trade deal, according to people with familiar with the matter. Negotiators asked the Trump administration to eliminate tariffs on about $110 billion in goods that were imposed in September and lower the 25% tariff rate on about $250 billion that began last year, said some of the people.
West Texas Intermediate for December delivery traded at $57.17 at 4:46pm after adding 69 cents to settle at $57.23 a barrel on the New York Mercantile Exchange.
Brent for January settlement rose 83 cents to end the session at $62.96 on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $5.67 premium to WTI for the same month.
The industry-funded API also reported that stockpiles in Cushing, Oklahoma, rose 1.25 million barrels while gasoline and distillate inventories contracted by a combined 5.82 million barrels. The Cushing build would be fifth consecutive increase, if the EIA data confirms it.
Meanwhile, in the U.S., crude stockpiles probably rose by 2 million barrels last week, according to the median estimate of analysts surveyed by Bloomberg.
“As you continue to see forecasts for builds and confirmation from the results, that is something the traders are looking at but not putting a lot of weight behind it compared to the overall big picture,” Graves said.
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