Oil edges up on US-China deal and Opec+ supply cuts

London — Oil edged further above $65 a barrel on Tuesday, supported by hopes that the US-China trade deal will bolster oil demand in 2020 and the prospect of lower US crude supplies.

The phase-one agreement between the world’s two largest economies has been “absolutely completed”. Larry Kudlow, a top White House adviser, said on Monday, adding that US exports to China will double under the deal.

Brent crude, the global benchmark, rose 17c to $65.51 a barrel by 11.04am GMT, while US West Texas Intermediate (WTI) crude added 1c to $60.22.

“Christmas has definitely arrived early for oil producers,” said Craig Erlam, analyst at brokerage Oanda. “Brent could get closer to $70 before the rally starts to run on fumes.”

The prolonged trade dispute has been a dampener for oil demand and weighed on prices. Banks including JPMorgan and Goldman Sachs have revised up their 2020 price forecasts in the wake of the improving trade outlook and a new oil cartel Opec-led agreement to curb output.

“The risk-on tone is still noticeable,” said Tamas Varga of oil broker PVM. “The next event to look out for is the weekly US oil inventory statistics.”

Supply reports from oil industry group the American Petroleum Institute (API) and the US government’s Energy Information Administration (EIA) are expected to show US crude inventories probably fell last week.

The first of the two, from the API, is scheduled for release at 9.30pm GMT on Tuesday. The government report follows on Wednesday.

Also supporting prices, Opec and allies, such as Russia (Opec+), are making a further oil supply cut of 500,000 barrels per day (bpd) from January 1 to support the market. This comes on top of the existing deal to trim supply by 1.2-million bpd that came into effect on January 1 this year.

Reuters