NEW YORK (Reuters) – Oil prices edged higher on Tuesday after five days of declines as the United States and China prepared to sign a preliminary trade deal and as Middle East tensions eased.
FILE PHOTO: Oil pump jacks work at sunset near Midland, Texas, U.S., August 21, 2019. REUTERS/Jessica Lutz
Brent LCOc1 futures gained 29 cents, or 0.5%, to settle at $64.49 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 ended 15 cents, or 0.3%, higher at $58.23.
That put WTI front-month futures below the second month CLc1-CLc2 for the first time since Nov. 19, which is known in the trading industry as contango.
Analysts noted oil also found technical support after WTI fell to a five-week low of $57.72 before bouncing off the 200-day moving average.
The expected signing of a Phase 1 U.S.-China trade agreement on Wednesday, marking a major step in ending a dispute that has cut global growth and dented demand for oil.
“Oil prices are tentatively rebounding after seller exhaustion kicked (in) as investors await the next developments on the trade front and whether we see a strong pickup with global demand following the phase-one trade deal,” Edward Moya, senior market analyst at OANDA in New York, said in a report.
China has pledged to buy more than $50 billion in energy supplies from the United States over the next two years, according to a source briefed on the trade deal.
Despite the trade dispute, China’s crude oil imports surged 9.5% in 2019, setting a record for a 17th straight year as demand growth from new refineries propelled purchases by the world’s top importer, data showed.
Crude price gains, however, were limited as concerns about possible supply disruptions eased due to a decline in tensions in the Middle East.
The recent declines came as investors unwound bullish positions built after the recent killing of a senior Iranian general in a U.S. air strike which sent oil prices to a four-month high earlier this month, said Harry Tchilinguirian, global oil strategist at BNP Paribas in London.
In the United States, the Energy Information Administration (EIA) projected the pace of oil production growth to record highs would slow to 3% in 2021, the lowest since 2016 when output declined.
Separately, U.S. crude inventories likely declined by about 500,000 barrels last week, a Reuters poll showed. [EIA/S]
The poll was conducted ahead of reports from the American Petroleum Institute (API), an industry group, on Tuesday, and the EIA on Wednesday.
Additional reporting By Ron Bousso in London and Jessica Jaganathan in Singapore; Editing by David Goodman and Bernadette Baum