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Oil climbs to level last seen after Saudi Attacks in September

“The hope is that a trade deal will translate into more demand.”

Bloomberg|
Dec 14, 2019, 01.02 PM IST
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The bullish momentum was undermined when US President Trump tweeted that existing levies will remain in effect.
By Robert Tuttle

Oil settled above $60 a barrel for the first time since missile strikes on Saudi Arabia sparked a record price surge three months ago.

Futures closed 1.5 per cent higher in New York on Friday, buoyed by a partial truce in the US -China trade war that has imperiled demand all year. Chinese officials said the countries agreed to hold off on a new round of tariffs set to go into effect in a matter of days. The bullish momentum was undermined when US President Donald Trump tweeted that existing levies will remain in effect.

“The market has just priced in this outcome to a certain extent already,” Daniel Ghali, a TD Securities commodity strategist, said by phone. “The hope is that a trade deal will translate into more demand.”

US oil futures rallied as traders assessed the US -China trade deal

“Risk appetite among financial investors is now likely to remain high thanks to the deal between the US and China,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. Yet “the oil market risks facing a massive oversupply and a pronounced inventory build, at least in the first half of the year.”

West Texas Intermediate for January delivery rose 89 cents to settle at $60.07 a barrel on the New York Mercantile Exchange. Brent for February settlement advanced $1.02 to $65.22 on the London-based ICE Futures Europe Exchange. The global benchmark settled at a $5.24 premium to WTI for the same month.

Other oil-market news:
  • Gasoline for January settlement rose 3.49 cents to settle at $1.6632 a gallon.
  • Moody’s Investors Service has a sunny outlook on the global oil and gas industry heading into next year, even as volatile energy prices hammer the sector and add to a mountain of debt.
  • The three big oil forecasting agencies all see OPEC producers needing to comply fully with output cuts they agreed in Vienna last week if they are to avoid big builds in inventories in the first half of 2020. But even that may not be enough, as demand estimates from two of them weaken again.
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