HOUSTON (Reuters) – Oil prices rose $1 a barrel on Monday, buoyed by an improved outlook for crude demand as better-than-expected U.S. jobs growth added to market hopes a preliminary U.S.-China trade deal would be reached this month.
FILE PHOTO: The sun sets behind an oil pump outside Saint-Fiacre, near Paris, France September 17, 2019. REUTERS/Christian Hartmann
Brent crude futures for January LCOc1 rose $1.03, or 1.7% to $62.72 a barrel by 10:26 a.m. CST (1613 GMT). December U.S. crude futures CLc1 was up $1.10 cents, or almost 2%, at $57.30 a barrel.
Brent traded near its highest in more than a month as market optimism about progress in U.S.-China trade negotiations propelled U.S. stock indexes to record highs, helping to elevate oil.
Chinese President Xi Jinping and U.S. President Donald Trump have been in continuous touch through “various means,” China said on Monday, when asked when and where the two leaders might meet to sign a trade deal.
“Both sides (China and the United States) are talking up the trade deal to a large degree. And you have the Federal Reserve leaning into this better-looking economic situation, which lifts all boats,” said John Kilduff, a partner at Again Capital LLC.
On Friday, prices jumped by about $2 a barrel after U.S. officials said a deal could be signed this month.
Improved U.S. jobs growth numbers in October and the upward revisions of the two previous months, reported on Friday, also eased fears of a global economic slowdown that would slow crude demand, oil-market analysts said.
Nonfarm payrolls increased by 128,000 jobs last month, U.S. Labor Department data showed. Economists polled by Reuters had forecast payrolls rising by 89,000 jobs in October. The economy also created 95,000 more jobs in August and September than previously estimated.
“This is just a huge wind at the back of the market now,” Kilduff said.
Federal Reserve’s interest rate cut last week and recent weakness in the U.S. dollar .DXY has also helped lift prices, analysts said. Demand for crude oil, which is traded in U.S. dollars, typically strengthens when the dollar weakens.
“Easing monetary policy, along with improved chances of a U.S.-China trade deal, is pushing up oil markets. (Expectations of) improved demand is lifting prices,” said Phillip Streible, senior market strategist at RJO Futures.
Hedge funds have started to rebuild long positions in crude and fuels.
On Monday, Iranian Oil Minister Bijan Zanganeh was quoted as saying that he expects further production cuts to be agreed at the next meeting of the Organization of the Petroleum Exporting Countries (OPEC) in December.
In an effort to prop up oil prices, OPEC, Russia and other producers since January have reduced oil output by 1.2 million barrels per day.
OPEC’s output recovered in October from an eight-year low after a rapid rebound in Saudi Arabia’s production from attacks on its oil infrastructure in September, offsetting losses in Ecuador and voluntary cuts under the pact.
Additional reporting by Shadia Nasralla in LONDON and Florence Tan in SINGAPORE; Editing by David Goodman and Marguerita Choy