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Oil Prices Trade Higher After Attack on Saudi Oilfield

Investing.com - Oil prices traded higher on Monday, lifted by positive remarks on Sino-U.S. trade talks and by reports of a new drone attack on an Saudi Arabian oilfield.

New York-traded West Texas Intermediate crude futures rose 24 cents, or 0.4%, to $55.05 a barrel by 7:30 AM ET (11:30 GMT), while Brent crude futures, the benchmark for oil prices outside the U.S., traded up 35 cents, or 0.6%, to $58.99.

Yemeni rebels reportedly attacked an oil facility in Saudi Arabia over the weekend, causing a fire at a gas plant and adding to geopolitical risk premiums.

Although reports suggested that it would take at least a week to repair the damage, state-run Saudi Aramco said oil production was not affected, paring initial gains of more than 1% in crude.

Crude benefited from a broad-based rally in risk asset after a weekend of mostly upbeat talk from the U.S. administration about trade. White House economic adviser Larry Kudlow said recent conversations between both sides had been “positive” and teleconferences would continue for a week to 10 days.

He indicated that those could lead to “substantive renewal of negotiations” that could begin with a visit of Chinese negotiators to the U.S.

President Donald Trump nonetheless repeated that he was not ready to “make a deal yet”.

Both OPEC and the International Energy Agency have had to revise down their forecasts for oil demand growth this year due to spillovers from the U.S.-China trade conflict.

Investing.com's senior commodity analyst Barani Krishnan said that the Federal Reserve's annual forum at Jackson Hole, Wyoming, later this week should give the market more clarity over the outlook after two weeks of volatility driven by conflicting signals.

Ole Hansen, head of commodity strategy at Saxo Bank, noted via Twitter that global demand fears were continuing to put pressure on Brent's premium over the U.S. benchmark WTI. He flagged data from the Commodity and Futures Trading Commission on Friday that showed net long speculative interest in WTI rising above its five-year average, even as it fell below the five-year average for Brent.

WTI has consistently traded at a discount to Brent since the start of the shale oil boom.

Also weighing on prices, Baker Hughes’ data released on Friday showed that U.S. energy firms increased the number of oil rigs operating for the first time in seven weeks despite plans by most producers to cut spending on new drilling this year

In other energy trading, gasoline futures inched up 0.1% to $1.6590 a gallon by 7:33 AM ET (11:33 GMT), while heating oil edged forward 0.2% to $1.8172 a gallon.

Lastly, natural gas futures traded down 1.5% to $2.167 per million British thermal unit.

-- Reuters contributed to this report.

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