Oil prices near three-month highs on US-China trade deal

Agreement will reduce some US tariffs in exchange for substantial Chinese purchases

LONDON: Oil prices on Monday held near three-month highs, supported by last week's announcement that an initial trade deal had been reached between the United States and China.

Brent crude oil futures rose $0.17 or 0.3% to $65.39 a barrel by 0940 GMT, while West Texas Intermediate crude was up $0.1 or 0.2% to $60.17 a barrel.

The United States and China announced on Friday a "phase one" agreement that will reduce some US tariffs in exchange for what US officials said would be a big jump in Chinese purchases of US farm products and other goods.

"What the market needs now, though, is clarity around exactly what the deal entails," analysts from ING Economics said. "The longer we have to wait for this detail, the more likely market participants will start to question how good a deal it actually is."

The Friday agreement averted additional tariffs on Chinese goods totalling $160 billion that the United States was set to impose over the weekend.

US Trade Representative Robert Lighthizer said on Sunday the deal would nearly double US exports to China over the next two years and was "totally done" despite the need for translation and revisions to its text.

China State Council's customs tariff commission said on Sunday it had suspended additional tariffs on some US goods that were meant to be implemented on December 15.

Data from China on Monday showing industrial output and retail sales growth accelerating more than expected in November offered some support for oil prices.

Investors remained cautious as growth in China was expected to slow further next year, with the government likely to set its growth target at about 6% in 2020 compared with 6-6.5% this year.

"It seems the market has now fully priced (in) the phase one trade agreement, so we are going to need further news if we are going to push through the important (technical) resistance that is just ahead," said Michael McCarthy, Chief Market Strategist at CMC Markets.

Amid rising US oil output, energy firms added rigs for the first time in eight weeks, although total US oil rig count remains on track to fall for the first year since 2016.