Oil rose further above $62 a barrel on Tuesday, supported by hopes that U.S. President Donald Trump may signal progress on trade talks with China and lower inventories at a U.S. oil hub.
Concern about slower economic growth and oil demand due to the fallout from the 16-month U.S.-China trade dispute sent prices lower on Monday. Trump gives a speech later on Tuesday and investors are keen for an update on the talks.
Brent crude, the global benchmark, was up 27 cents at $62.44 a barrel, after falling as low as $61.90. West Texas Intermediate (WTI) crude was up 22 cents at $57.08.
“The oil market is in a holding pattern,” said Tamas Varga of oil broker PVM. “The next $5-$10 move will be decided by economic and trade considerations.”
“He is widely expected to delay his decision to impose tariffs on European car and auto part imports and will also shed further light on the status of the trade negotiations with China,” Varga added, referring to Trump’s speech.
The U.S. president said on Saturday that talks with China were moving along “very nicely” but the United States would make a deal only if it was the right one. He said there had been incorrect reporting about U.S. willingness to lift tariffs.
“Market participants continue to believe in a (partial) trade agreement to be signed soon,” said Carsten Fritsch, analyst at Commerzbank. “Increasing doubts about this would put oil prices under pressure.”
Adding further support, U.S. data showed that crude inventories at Cushing, the delivery point for WTI, fell by about 1.2 million barrels in the week to Nov. 8, traders said, citing market intelligence firm Genscape.
Cushing inventories had grown for five weeks in a row through Nov. 1, according to government data.
Brent has risen 16% in 2019, supported by a supply-limiting pact by the Organization of the Petroleum Exporting Countries and allies including Russia.
The producers meet on Dec. 5-6 to decide whether to extend the deal.
Oman, one of the outside producers working with OPEC, said on Monday that the alliance would probably extend the agreement but was unlikely to increase the size of the supply cut.
In a further supportive supply-side development, Goldman Sachs cut its 2020 forecast for growth in U.S. oil production, which has surged in recent years and helped keep a lid on prices.