Oil headed for a second weekly advance on signs the US and China are moving closer to a trade deal, and as investors weighed the Opec+ coalition’s output cuts against surging American supply.
Futures in New York edged higher Friday and were up 2.7 per cent this week. US President Donald Trump will meet with China’s top trade negotiator on Friday as the world’s two biggest economies try to resolve differences. US crude stockpiles rose for a fifth week and production jumped to a record high, the Energy Information Administration said Thursday.
After a rocky start to the month, crude has resumed its rally due to aggressive supply cuts from the Organisation of Petroleum Exporting Countries and its allies. While Saudi Arabia has said it expects oil markets to balance by April, record-breaking American production is tempering the outlook.
“Expectations are really rising that the US-China meetings will result in a deal, and commodities are getting a boost since they’re included in their discussions,” said Hong Sungki, a commodities trader at NH Investment & Securities Company in Seoul. “Easing of trade tensions will lead to improved global growth and more demand from China for American oil.”
West Texas Intermediate for April delivery rose 13 cents to $57.09 per barrel on the New York Mercantile Exchange at 7:33am in London after reaching a three-month high of $57.61 on Thursday. Futures have added $1.49 this week.
Brent for April settlement climbed 6 cents to $67.13 a barrel on the London-based ICE Futures Europe exchange. The contract has risen 88 cents this week. The global benchmark crude was at a $10.06 premium over WTI for the same month.
Mr Trump is set to meet Chinese Vice Premier Liu He. He was listed on the White House’s daily schedule for 2:30pm in Washington. That comes after reports that negotiators are working on memorandums of understanding - including on agriculture and non-tariff barriers - that would form the basis of a final deal.
Even as trade talks boosted investor sentiment, nationwide US crude stockpiles rose to 454.5 million barrels - the highest since November 2017 - in the week to February 15, the EIA data showed. US production reached 12 million barrels per day in the same period.