By Bloomberg News - August 15, 2019
Crude oil jumped the most this year
as the trade deadlock between the world’s biggest economies showed signs of
easing, calming fears that global economic growth would be endangered.
Futures surged 4.7 percent in London
on Tuesday, settling above $61 a barrel for the first time in more than a week.
Optimism swept across financial markets after the US postponed tariffs on some
Chinese goods and the Asian powerhouse said the two sides will hold new talks
in two weeks. New York-traded crude climbed 4 percent.
“Some of the pessimism about oil
demand and the trade war is being washed out of the market by these
announcements,” said Michael Lynch, president of Strategic Energy &
Economic Research Inc. in Winchester, Massachusetts.
Prices surrendered some of the gains
later in the day after the American Petroleum Institute was said to find that
US crude supplies grew by 3.7 million barrels last week. If confirmed by
government data on Wednesday, it would be the second straight surprise increase
during a time when summer travel typically drains petroleum stocks.
While Brent has gained the last
three days, it’s still down about 6 percent this month. Saudi Arabia’s pledge
to curb exports in a matter of weeks hasn’t been sufficient to offset booming
production from American shale fields and lingering fears about demand growth.
“We still have an undecided oil
market,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S in
Copenhagen. “That may be surprising, given the renewed verbal intervention from
oil producers increasingly frustrated to see that their medicine—production
cuts—isn’t having the desired effect.”
In the US, West Texas Intermediate
crude for September delivery rose $2.17 to settle at $57.10 a barrel on the New
York Mercantile Exchange. Brent for October settlement rose $2.73 to $61.30 on
the ICE Futures Europe Exchange for the biggest one-day gain since December.
US crude retreated to $56.73 a
barrel and Brent was at $60.92 at 4:55 p.m. after the stockpiles report.
The US will postpone until
mid-December a 10-percent tariff on Chinese products on many holiday-shopping
lists, including mobile phones and toys, President Donald J. Trump said. China
said top officials from the countries spoke by telephone on Tuesday and will
resume discussions in two weeks.
Expectations of declining US crude
supplies have also driven bullish sentiment. Inventories probably dropped by
about 2.5 million barrels last week, according to the median estimate in a
Bloomberg survey before Energy Information Administration data due Wednesday.
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