Singapore — Oil prices edged higher on Tuesday as investors focused on the signing of a preliminary trade deal between the US and China, the world’s top oil consumers, and on expectations of a drawdown in US crude oil inventories.
However, price gains were capped by receding Middle East tensions, with Tehran and Washington desisting from any further escalation after this month’s clashes.
Brent crude was up 16c, or 0.3%, at $64.36 a barrel by 3am GMT after falling 1% on Monday. US West Texas Intermediate crude futures were up 13c, or 0.2%, at $58.21 a barrel.
“Oil prices are modestly rebounding, following four days of intense selling,” said Edward Moya, analyst at brokerage Oanda, pointing to trade-deal optimism and fading concerns over the US-Iran conflict.
“Oil prices are tentatively rebounding after seller exhaustion kicked in as investors await the next developments on the trade front and as earnings season begins.”
Oil prices were supported ahead of the signing at the White House on Wednesday of a phase one trade deal, a step in ending a dispute that has cut global growth and dented demand for oil.
Still, with traders already pricing in the signing of the deal, there is more downside risk to prices, said Michael McCarthy, chief market strategist at CMC Markets.
Separately, US crude oil inventories were expected to have fallen last week, a preliminary Reuters poll showed on Monday, helping to boost prices.
The poll was conducted ahead of reports from the American Petroleum Institute (API), an industry group, and the Energy Information Administration (EIA), an agency of the US department of energy.
China’s crude oil imports in 2019 grew by nearly 10% from the previous year on demand growth from new mega-refineries, customs data showed.
Elsewhere, Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, said his country will work for oil market stability at a time of heightened US-Iranian tension and wants to see sustainable prices and demand growth.
Oil prices surged to their highest in almost four months after a US drone strike killed an Iranian commander on January 3 and Iran retaliated with missiles launched against US bases in Iraq. But they slumped again as Washington and Tehran retreated from the brink of direct conflict last week.
Abdulaziz said it was too early to talk about whether the Organisation of the Petroleum Exporting Countries (Opec) and its allies, a group known as Opec+, would continue with production curbs set to expire in March.