Investing.com – Canceled China tariffs or weak oil demand, which is bigger? Oil traders obviously think the former, pushing crude prices up Thursday on signs the Trump administration was pulling back higher duties due this weekend on Chinese imports.
Both U.S. West Texas Intermediate and U.K. Brent crude futures were up about 1% each as traders looked beyond the weak oil demand forecast for next year by the International Energy Agency (IEA) to focus instead on speculation that the tariffs on China may not happen. Bloomberg reported after the regular trading session for oil in New York that an "agreement in principle" had been reached on a phase one trade deal between the U.S. and China.
Trump also tweeted earlier on Thursday that the two sides were “very close” to a deal — though not everyone bought the story as the president habitually resorts to such language without results.
NYMEX-traded WTI, the U.S. crude benchmark, settled up 67 cents, or 0.7%, at $59.18 per barrel. In post-settlement trading, it reached $59.39 by 3:35 PM ET (20:35 GMT), reacting to the Bloomberg report on the phase one deal.
ICE-traded Brent, the global oil benchmark, was up 75 cents, or 1.2%, at $64.47 in post-settlement trade.
Oil was down earlier in the day after the Paris-based IEA said global oil inventories could rise sharply through March despite an agreement by OPEC and its allies to deepen output cuts as well as lower expected production by the United States and other non-OPEC nations.
"Despite the additional curbs ... and a reduction in our forecast of 2020 non-OPEC supply growth to 2.1 million barrels per day (bpd), global oil inventories could build by 700,000 bpd in Q1 2020," the IEA said in its monthly report distributed Thursday.
OPEC, in its own monthly report on Wednesday, said it expected a small oil market deficit in the next year, suggesting the market is tighter than previously thought.