(Bloomberg) — Oil climbed to the highest in nearly two months amid optimism that the U.S. and China are close to locking down a partial trade deal.
Futures jumped 1.7% on Friday in New York, pushing a weekly advance to 0.8% after White House economic adviser Larry Kudlow said late Thursday negotiations between the two countries were coming down to the final stages. That outweighed U.S. government data earlier this week that showed an expansion in crude stockpiles and oil production at record-high levels.
“The most important factor is economic growth and demand growth and the trade talks are going to be the indicator for expectations about how that’s going to play out,” said Gene McGillian, senior analyst and broker for Tradition Energy Group in Stamford, Connecticut. “We’ve seen optimism surrounding the trade deal bring some length into the market.”
Still, is down about 13% since late April. The Organization of Petroleum Exporting Countries has indicated it won’t cut output deeper to stave off the impending surplus and predicts worldwide supplies will exceed demand by about 645,000 barrels a day in the first half of next year. Meanwhile, the International Energy Agency said soaring production outside OPEC and high inventories will keep consumers comfortably supplied next year.
West Texas Intermediate for December delivery gained 95 cents to settle at $57.72 a barrel on the New York Mercantile Exchange.
for January settlement rose $1.02 to end the session at $63.30 a barrel on the London-based ICE (NYSE:) Futures Europe Exchange. The global benchmark crude traded at a $5.47 premium to WTI for the same month.
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U.S. crude output increased by 200,000 barrels a day to 12.8 million a day last week, according to Energy Information Administration data on Thursday. While nationwide crude inventories rose, stockpiles at the key storage hub at Cushing, Oklahoma, declined for the first time in six weeks.
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