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Oil extends rally on trade deal optimism and inventory forecast
[NEW YORK] Oil stretched its longest streak of gains in almost 1 1/2 years on optimism the world's two largest economies can reach a trade deal and American crude inventories may fall.
Futures in New York climbed as much as 0.9 per cent and are on course for a seventh day of gains, the longest winning streak since July 3, 2017. There's a "very good chance" the US gets a reasonable deal with China, Commerce Secretary Wilbur Ross told CNBC Monday, as trade negotiations began in Beijing. Meanwhile, expectations for a nationwide decline in US crude inventories alleviated worries about a supply glut.
Crude's recovering after posting the first annual loss since 2015 on fears of oversupply and weakening global growth. Those concerns have eased as the Organization of Petroleum Exporting Countries (Opec) and it allies start their pledged production cuts this month, while the US Federal Reserve signalled a hold in its interest-rate hikes that had spurred risk aversion and volatility across global financial markets.
"There a confluence of factors helping - a big driver is progress in trade talks and hopes that global growth will be supported," said Stephen Innes, head of trading for Asia Pacific at Oanda Corp. "Fed's easier stance and Opec's commitment to cut production as well as expectations that inventories should drop are lending a hand to this positive investor sentiment."
West Texas Intermediate for February delivery increased as much as 44 US cents to US$48.96 a barrel on the New York Mercantile Exchange, and traded 22 US cents higher at US$48.74 a barrel at 10.54am in Singapore. Prices rose 1.2 per cent to US$48.52 a barrel on Monday.
Brent for March settlement gained 22 US cents to US$57.55 a barrel on the ICE Futures Europe Exchange in London. The global benchmark crude traded at an US$8.50 a barrel premium to WTI for the same month.