U.S. Markets open in 2 hrs 56 mins

Oil Jumps on Trade-Talk Optimism, Iranian Tanker Incident

Investing.com – Optimism that the United States and China can agree on a partial trade deal at least, along with reports of an attack on an Iranian oil tanker, drove crude prices up by nearly 2% on Friday, their most in nearly a month.

U.S. West Texas Intermediate crude settled up $1.15, or 2.1%, at $54.70 per barrel.

U.K. Brent oil closed up $1.41, or 2.4%, at $60.51.

For the week, both the benchmarks rose 3.6%, marking their biggest rally since the run-up right after the Sept. 14 attack on Saudi Arabia’s oil facilities. Oil prices jumped nearly 15% in their first day of trading after that attack, and settled that week up by 6% or more.

Despite Friday’s rebound, some traders said they were poised to sell oil in the new week if the trade deal did not materialize and calm returned to the Persian Gulf.

“We’ve seen what’s happened so far with U.S.-China negotiations, and until it’s there in print and endorsed by the Chinese, it’s not done,” said John Kilduff, partner at New York energy hedge fund Again Capital. “The tensions in the Gulf have also dissipated almost as quickly as they began, so that’s another factor to consider."

Risk assets across markets rose on Friday as hopes ran high that talks between President Donald Trump and Chinese Vice Premier Liu He in Washington would culminate in a partial trade deal and delay planned U.S. tariff increases against Beijing. Trump met Liu in the White House at 2:45 PM ET (18:45 GMT) after two days of top-level discussions between the two sides.

Trump himself tweeted: “Good things are happening at China Trade Talk Meeting. Warmer feelings than in recent past, more like the Old Days. I will be meeting with the Vice Premier today. All would like to see something significant happen!”

Trump was scheduled to meet Liu in the White House after two days of top-level discussions between the two sides. But nearly an hour later, at the time of writing, there was no follow up tweet from the president or statement from the White House.

Crude prices also spiked earlier on Friday after Iranian claims of an attack on one of its oil tankers ran into skepticism, while the International Energy Agency also tempered buying interest by again trimming its forecasts for global oil demand.

Iranian national news agency IRNA said the tanker Sabiti, sailing through the Red Sea, had been struck by two unidentified objects believed to be missiles, causing a fire and oil leakage into the sea.

But the Iranian government later undermined the credibility of the report by saying that the ship had not been set on fire. IRNA also cited the National Iranian Oil Company as denying suggestions that it had been struck by missiles fired from Saudi Arabia.

The consultancy Tankertrackers.com noted that Sabiti was still making surprisingly good speed after the attack.

The International Energy Agency, meanwhile, downgraded its forecast for global oil demand growth next year by 100,000 barrels a day. It also cut its forecast for 2019 by a similar amount, but said this was due to changes in the calculation of last year’s output.

In addition, it noted that petroleum stocks in advanced economies had increased for the fifth consecutive month in August, leaving them close to the record levels seen in 2016, when they topped 3 billion barrels.

Related Articles

Crops Surge on Prospect China Will Step Up Buying in Trade Truce

Oil producers, refiners grapple with surging global freight rates after U.S. sanctions

Gold Sinks Firmly Beneath $1,500 as U.S. Hints at Trade Deal