Oil Gains 3% as Trade Hopes Rise

by Bloomberg | Mia Gindis, Alex Longley
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Oil rose as President Donald Trump announced a trade framework with the UK, spurring some optimism about deals to come.
West Texas Intermediate climbed 3.2% to approach $60 a barrel. Trump said the UK would fast-track US items through its customs process and reduce barriers on billions of dollars of agricultural, chemical, energy and industrial exports, including ethanol. Notably, the terms are limited in scope and a 10% baseline tariff remains.
The British deal is raising investors’ confidence that agreements can be reached in the more complicated trade talks that lie ahead, specifically negotiations between US and Chinese officials kicking off this weekend. Trump said that the 145% levy against China, the world’s largest crude-importer, could be lowered if talks go well.
“The real driver of risk assets today appears to be renewed optimism around progress in the US–China trade talks,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “It’s also worth noting that sentiment toward crude remains overwhelmingly bearish.”
Crude has slid since Trump took office on concerns that his global trade war will dent economic growth and slow energy demand. Adding to the bearishness, OPEC+ has decided to revive idled output faster than expected. Already, the drop in oil prices is spurring American shale producers to cut spending in the Permian Basin.
Still, small pockets of bullishness are visible in the options market. There was active trading of Brent $95 September call options, which profit when futures rise.
The US on Thursday sanctioned a third Chinese “teapot” oil refinery and various other entities associated with Iran, days ahead of a fourth round of nuclear talks between Washington and Tehran. The failure of the negotiations could push Brent up toward $70 a barrel, Citigroup analysts including Eric Lee said in a note.
In the US, crude inventories fell for a second week to the lowest since late March, according to the Energy Information Administration. Stockpiles at the oil storage hub at Cushing, Oklahoma, also shrank.
Oil Prices
- WTI for June delivery gained 3.2% to settle at $59.91 a barrel in New York.
- Brent for July settlement rose 2.8% to settle at $62.84 a barrel.
by Bloomberg | Mia Gindis, Alex Longley
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas