Oil rises on hopes for US-China trade deal

Prices are also supported by China's factory activity that expanded at fastest pace since 2017

Reuters November 01, 2019
Prices are also supported by China's factory activity that expanded at fastest pace since 2017. PHOTO: REUTERS

LONDON: Oil prices rose on Friday on signs of progress in US-China trade talks and a surprise bounce in Chinese manufacturing activity.

Brent crude was up $0.25 at $59.87 a barrel by 1153 GMT, but remained on course for a drop of about 3.4% for the week.

West Texas Intermediate crude rose $0.31 to $54.49 a barrel, which would leave it with a weekly loss of more than 3.8%.

A Reuters survey showed that oil prices are expected to remain under pressure this year and next. The poll of 51 economists and analysts forecast Brent crude would average $64.16 a barrel in 2019 and $62.38 next year.

Another Reuters survey found output from OPEC members recovered in October from an eight-year low with a rapid recovery in Saudi Arabia's production from September attacks on its oil infrastructure offsetting losses in Ecuador and voluntary curbs under an international supply pact.

Worries about global economic growth, along with oil demand, were eased after US Commerce Secretary Wilbur Ross said on Friday the initial "phase one" trade pact with China appears to be in good shape and is likely to be signed around mid-November.

A trade war between the world's two biggest economies has weighed on prices fanning fears that slowing economic growth could dent demand for oil.

"The US-China truce is not yet on solid ground... Even if the phase one deal is signed this month, global economic conditions will not fully rebound as long as existing tariffs remain," said Han Tan, market analyst at FXTM.

Prices were also supported by China's factory activity that unexpectedly expanded at the fastest pace since 2017, raising optimism over the health of the world's second-largest economy.

Still, manufacturing activity in North Asia contracted, with Japan's sinking to a more than three-year low in October on shrinking new orders and output. Activity in South Korea and Taiwan also shrank as companies bore the brunt of slumping demand across the globe.

US crude inventories rose by 5.7 million barrels in the week to October 25, dwarfing analyst expectations for an increase of just 494,000 barrels.

US crude production soared nearly 600,000 barrels per day in August to a record of 12.4 million, buoyed by a 30% increase in Gulf of Mexico output, government data released on Thursday showed.


Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ


Most Read