SINGAPORE: Oil prices extended gains on Friday, scaling three-month highs as the US and China moved closer to a resolution to the 18-month trade war between the world’s two biggest economies that has raised big questions about global demand for crude.
Brent futures climbed 48 cents, or 0.8%, to US$64.68 a barrel by 0221 GMT, its highest since Sept 23.
West Texas Intermediate (WTI) crude was up 36 cents, or 0.6%, to US$59.54 a barrel, the highest since Sept 16.
While a trade deal that would end uncertainty could provide a shot in the arm for oil demand in the near term, concerns continue to hover about the demand profile amid ample supplies going forward.
“Lingering doubts about demand will cap the upside on prices,” said ANZ Bank in a note on Friday.
In the meantime, the White House has agreed to suspend some tariffs on Chinese goods and reduce others in return for Beijing’s pledge to hike purchases of US farm products in 2020, sources said on Thursday.
But the White House didn’t release any official statement, raising questions about whether the terms had been agreed by both sides.
Looking further ahead, an International Energy Agency report on Thursday pointed to future pressure on oil prices, predicting a sharp rise in global inventories despite an agreement by the Organisation of the Petroleum Exporting Countries (OPEC) and its allies to deepen output cuts.
That contrasts with OPEC’s own research, which forecasts a small deficit in the market next year due to Saudi Arabia’s supply restraint even before the latest cut agreement takes effect.
Elsewhere, Norway’s oil output in November hit a 32-month high at 1.71 million barrels per day, the Norwegian Petroleum Directorate (NPD) said on Thursday.
“While the current (US-China) trade deal will most probably limit demand devastation, it might not be enough to counter an oversupplied market in early 2020, hence the possible reason we are not seeing a massive bounce in oil prices now,” said Stephen Innes, market strategist at AxiTrader. – By Roslan Khasawneh, Reuters
