Oil rose near $70 a barrel in London, a level last breached in November, as global crude supplies tightened while hopes for an end to the US-China trade impasse lifted financial markets.
Brent crude’s rapid recovery this year -- with the biggest quarterly gain in almost a decade -- is a victory for the production cuts made by Opec and its allies. Yet by preventing the re-emergence of a supply glut, the group has stoked the ire of President Donald Trump and heightened the risk of legal moves against it in the US Rising prices may also influence White House decision-making on sanctions against cartel members Iran and Venezuela.
Oil added as much as 0.9% in London, a fourth daily increase. Crude rose along with equities, which gained as US and Chinese officials prepared to resume negotiations in Washington to resolve differences over trade. Though US industry data indicated that the nation’s crude stockpiles increased last week, a fourth month of lower production from Opec is tightening global supplies.
“The $70-a-barrel price level is within striking distance,” said Norbert Ruecker, head of macro and commodity research at Julius Baer Group in Zurich. “The market seems eager to recoup this level.”
Brent for June settlement rose 24 cents to $69.61 a barrel on the ICE Futures Europe exchange as of 1:17 p.m. in London, having earlier climbed to $69.96. The global benchmark crude’s premium over West Texas Intermediate widened to $6.94 a barrel for the same month.
WTI for May delivery was little changed at $62.60 a barrel on the New York Mercantile Exchange after rising as much as 41 cents earlier. WTI climbed 5.5 percent over the previous three sessions.
Chinese Vice Premier Liu He will resume negotiations with his US counterparts in Washington on Wednesday as both governments push for an agreement to end their protracted trade dispute. Officials from the two countries have resolved most of their issues but are still haggling over enforcement mechanisms, the Financial Times reported.
On the supply side, Russian output has dropped to 190 000 barrels a day below October levels, the country’s energy minister said in a statement, falling short of the 228 000-barrel-a-day cut pledged under the Opec+ deal. That was offset by Saudi Arabia’s reduction to a four-year low of 9.82-million barrels a day.
The Opec+ efforts have allayed concerns over an American Petroleum Institute report that was said to show a three-million-barrel weekly increase in US crude inventories. The API reported lower gasoline and distillate stockpiles.
“There is an assumption that the pull-through from the products will more than overcome the crude surplus,” said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific in Sydney.