(Bloomberg) -- Oil held near $60 a barrel on optimism the partial U.S.-China trade pact will bolster demand, while analysts estimated a pullback in American crude stockpiles.
Futures in New York were steady after rising 2.5% over the previous three sessions. A limited trade agreement, to be signed and released early next month, will see some tariffs reduced and prevent an escalation in the conflict between the world’s two largest economies. U.S. stockpiles are projected to have declined by 1.75 million barrels last week, a Bloomberg survey showed.
While leaving most of the tariffs built up over the trade war in place, the partial deal has relieved investors worried about further escalation and driven gains across the commodity complex. It follows deeper-than-expected output cuts agreed by OPEC+ earlier in the month, which Citigroup Inc (NYSE:C). said will help keep a floor under prices and which allayed some of the concern that next year will see a renewed oversupply.
“The conditions for a rising oil price appear favorable at present,” said Eugen Weinberg, head of commodities research at Commerzbank AG (DE:CBKG) in Frankfurt. “Economic optimism coupled with a weaker U.S. dollar and growing investor demand have allowed Brent and WTI to climb.”
West Texas Intermediate for January delivery rose 4 cents to $60.25 a barrel on the New York Mercantile Exchange as of 10:27 a.m. London time. It rose 0.2% on Monday and is up around 9% so far in December.
Brent for February settlement edged up 9 cents to $65.43 a barrel on the London-based ICE Futures Europe Exchange, after climbing 0.2% on Monday. The global benchmark crude traded at a $5.24-a-barrel premium to WTI for the same month.
If the Bloomberg survey is confirmed by Energy Information Administration data due Wednesday, it would be only the third weekly decline in inventories this quarter and would help to reduce concern over ample supply. However, the EIA said Monday that it expected American shale production to rise by 30,000 barrels a day to around 9.14 million in January.