Oil rallied today (Wednesday) on continued optimism over U.S.-China trade talks and industry data pointing to a fall in domestic inventories, pushing U.S. futures back above $50 a barrel for the first time since mid-December.
West Texas Intermediate crude for February delivery CLG9 rose $1.13, or 2.3%, to $50.91 a barrel, trading above the $50 level on an intraday basis for the first time since Dec. 14, according to FactSet data. March Brent crude UK:LCOH9 rose $1.13, or 2.4%, to $59.85 a barrel.
U.S.-China trade talks concluded Wednesday after being extended to a third day. Global stocks rose, with U.S. futures pointing to a higher start for Wall Street, with Bloomberg reporting that President Donald Trump is eager to complete a deal on the expectation that it would boost financial markets battered in part due to fears surrounding the trade battle.
Analysts at Commerzbank said trade-related optimism was also lifting crude, noting that the slump in oil prices at the end of 2018 “was driven not only by the oversupply, but also by the selloff on the stock markets. This was due to fears that the trade conflict will slow economic growth in the U.S. and China, ultimately also dampening oil demand in the two leading oil consumer countries.”
Also contributing to the positive tone, the American Petroleum Institute late Tuesday reported that U.S. crude supplies fell by 6.1 million barrels in the week ended Jan. 4, according to sources. The industry trade group also said gasoline stockpiles rose 5.5 million barrels, while distillate stocks jumped 10.2 million barrels.
More closely watched data from the Energy Information Administration due for release later Wednesday is expected to show crude inventories fell by 1.4 million barrels, according to a survey of analysts by S&P Global Platts, while gasoline stocks are forecast to rise 4.2 million barrels and distillate inventories are expected to show an increase of 4.3 million barrels.
SOURCE: MarketWatch