Oil advanced near $72 a barrel as an economic truce between the U.S. and China eased fears of a trade war, and before a meeting on crude prices between the ministers of top producers Russia and Saudi Arabia.
Futures in New York rose as much as 0.9 percent. U.S. Treasury Secretary Steven Mnuchin said Sunday the two nations are “putting the trade war on hold” as they work on a framework to balance trade. Saudi Arabia’s Energy Minister Khalid Al-Falih and his Russian counterpart Alexander Novak are scheduled to meet this week in St. Petersburg to discuss all issues related to the oil market, including prices, according to Novak.
Oil traded in both New York and London is set for a third monthly gain after geopolitical tensions in the Middle East and the U.S. reimposing sanctions on Iran’s oil exports pushed crude to levels not seen for more than three years. While OPEC continues to tighten global inventories, data also showed that U.S. crude rigs, an indicator for potential shale production, remained unchanged last week.
“Concerns eased over a potential trade war between the U.S. and China, which could have hit economic growth, boosting positive sentiment among investors today,” Kim Kwangrae, a commodities analyst at Samsung Futures Inc., said by phone from Seoul. “The number of U.S. rigs didn’t rise after a good streak of gains, which is also a supportive factor for oil prices.”
West Texas Intermediate for June delivery, which expires on Tuesday, increased 0.6 percent, or 40 cents, to $71.68 a barrel on the New York Mercantile Exchanges at 3:02 p.m. in Singapore. Prices climbed 0.8 percent last week. Total volume traded was about 31 percent below the 100-day average. The more-actively traded July contract rose 39 cents to $71.76.
Brent futures for July settlement were 0.6 percent higher at $78.98 on the London-based ICE Futures Europe exchange. The contract posted a sixth straight weekly gain last week. The global benchmark traded at a $7.22 premium to WTI for the same month.
Yuan-denominated futures dropped 0.8 percent to 482.4 yuan a barrel on the Shanghai International Energy Exchange. Futures gained 3.3 percent last week, a sixth weekly advance.
America and China agreed to “substantially” reduce the U.S. trade deficit in goods with the Asian nation after two days of negotiations. Beijing promised to “significantly” increase purchases of U.S. goods and services, which soothed the nerves of investors who worried that the two major economies were on the verge of an all-out trade war.
Explorers held drilling in check in the U.S. oil market, with the number of rigs targeting oil unchanged at 844 last week, according to Baker Hughes data. That halted a six-week gaining streak and is only the fifth time this year that explorers have not boosted the rig count.
The meeting between Saudi Arabia and Russia expected during an economic forum later this week comes after Saudi Arabian oil minister Al-Falih expressed concern over recent volatility in the oil market. Russia’s Novak said on Friday that “we need to look at a longer period — at how stable this price is, how volatile or not it will be, what factors affect it.” Talks will continue when the Organization of Petroleum Exporting Countries and its allies gather in Vienna in June, Novak said. — Bloomberg