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Markets

Oil gains on U.S.-China trade talks optimism

Brent crude futures were at $63.73, up 34 cents or 0.54pc, the benchmark having also finished little changed last w
25 Nov 2019
  • Brent crude futures were at $63.73, up 34 cents or 0.54pc, the benchmark having also finished little changed last week.
  • The Organization of the Petroleum Exporting Countries meets on Dec. 5 at its headquarters in Vienna.
  • Prices could be pushed higher if OPEC+ agrees to extend its supply cut by three more months to mid-2020.

SINGAPORE: Oil prices rose on Monday as positive comments from the United States and China rekindled hopes in global markets that the world's two largest economies could soon sign an interim deal to end their bitter trade war.

West Texas Intermediate (WTI) crude rose 26 cents, or 0.45pc to $58.03 a barrel by 0759 GMT, having ended last week little changed after tracking the trade talks through their ups and downs.

Brent crude futures were at $63.73, up 34 cents or 0.54pc, the benchmark having also finished little changed last week.

"It is still all about trade talks," said Michael McCarthy, chief market strategist at CMC Markets in Sydney. "It seems to be dominating markets action at the moment."

Monday's higher opening prices came after U.S. national security adviser Robert O'Brien said on Saturday that an initial trade agreement with China is still possible by the end of the year.

This came a day after U.S. President Donald Trump and Chinese President Xi Jinping expressed a desire to sign an initial trade deal and defuse a 16-month tariff war that has lowered global growth - though Trump said he had yet to decide whether he wanted to finalise a deal, while Xi said he would not be afraid to retaliate when necessary.

China's foreign ministry said on Monday it hopes the United States will work with Beijing on a basis of equality and mutual respect on the ongoing bilateral trade negotiations.

A move by China to protect intellectual property was also providing a supportive atmosphere for the trade talks, McCarthy added.

"This is a big step forward for potential trade negotiation if they are adopted as official policy," he said.

Still, concern remains that events in Hong Kong, riven by months of anti-government unrest, could overshadow trade talk progress.

U.S. national security adviser O'Brien warned on Saturday that Washington would not turn a blind eye to what happens in Hong Kong, where demonstrators were angry at what they see as an erosion of freedoms promised to the ex-British colony when it returned to Chinese rule more than 20 years ago.

Over the weekend, pro-democracy candidates scored a resounding win in district council elections.

The Organization of the Petroleum Exporting Countries meets on Dec. 5 at its headquarters in Vienna, followed by talks with a group of other oil producers, led by Russia, known as OPEC+.

Prices could be pushed higher if OPEC+ agrees to extend its supply cut by three more months to mid-2020.