Oil costs extended gains Friday, scaling three-month highs as the United States and China moved nearer to a decision to the 18-month trade conflict between the world’s two most prominent economies that have raised big questions about global demand for crude oil.
Brent futures surged 43 cents, i.e., or 0.7%, to $64.63 per barrel by 0426 GMT, its highest since September 23.
West Texas Intermediate (WTI) crude was up 31 cents, i.e., or 0.5%, to $59.49 per barrel, the highest since September 16.
“Risk appetite ran wild after Trump signaled he made a contract with China and that will solely be positive for global demand projections for crude oil,” said Edward Moya, senior market analyst at OANDA.
A plunge in the U.S. greenback .DXY against the backdrop of a robust pound further helped to boost commodity costs, said Margaret Yang, market analyst at CMC Markets.
Mirroring investor optimism, Asian share markets leaped to multi-month highs Friday after Wall Street soared to record highs Thursday.
While a trade settlement that would end uncertainty could provide a shot in the arm for oil demand in the near interval, concerns continue to hover in regards to the demand profile amid ample supplies going forward.
In the meantime, the White House has agreed to drop part of tariffs on Chinese imports and reduce others in return for Beijing’s commitment to hiking purchases of U.S. farm goods next year, sources said Thursday.
However, the White House didn’t make any official statement, raising questions on whether or not each side had agreed on the terms.
Looking further, an International Energy Agency Thursday report pointed to future pressure on oil prices, predicting a sharp increase in global inventories regardless of a settlement by the OPEC+.