Oil near three-month high on cautious optimism over trade deal
Oil steadied near a three-month high on cautious optimism that a preliminary trade deal between the U.S. and China will support global fuel consumption.
Futures held near $60 a barrel in New York after settling at the highest since Sept. 16 on Friday. The deal involves China buying more American farm products and making new commitments on intellectual property, while the U.S. will suspend new levies and halve existing tariffs on $120 billion of Chinese imports. It's expected to be signed and released publicly in early January.
While the partial trade deal leaves most of the tariffs built up over the 20-month conflict in place, it's adding to a more positive outlook for oil prices, which were already drawing support from deeper-than-expected production cuts announced this month by OPEC and its partners. Hedge funds increased net-bullish wagers on West Texas Intermediate crude by the most in three years in the week through Dec. 10.
"The latest Christmas present for oil bulls is a long-awaited trade agreement between the U.S. and China," Citigroup Inc. analysts including Francesco Martoccia said in a report.
WTI for January delivery was little changed at $60.08 a barrel on the New York Mercantile Exchange at 8:16 a.m. local time. It gained 1.5% last week.
Brent for February settlement was 22 cents higher at $65.44 a barrel on the London-based ICE Futures Europe Exchange after rising 1.6% on Friday and 1.3% last week. The global benchmark was at a $5.39 premium to WTI for the same month.
