Oil prices rose on Friday to their highest level since mid-September as a ‘phase one’ trade deal between the world’s two largest economies, the United States and China, looks increasingly likely.
At 08:55 a.m. EDT on Friday, WTI Crude was nearing the US$60 per barrel mark, rising by 1.01 percent to US$59.78.
Brent Crude traded up 1.18 percent at US$64.96, having hit US$65 earlier in the day.
Oil prices haven’t been so high since September 16, when the attack on Saudi Arabia’s oil infrastructure sent prices soaring for a day.
On Friday, prices extended gains made on Thursday after U.S. President Donald Trump said that the United States was very close to some sort of a deal with China and as the U.S. had reportedly offered China to roll back some existing tariffs and cancel a new round of tariffs set to take effect on December 15.
On Thursday, President Trump tweeted “Getting VERY close to a BIG DEAL with China. They want it, and so do we!”
According to people briefed on the protracted U.S.-China trade negotiations by The Wall Street Journal, the U.S. has recently offered to
Beijing to reduce some of the current tariffs by as much as 50 percent, if China pledges to buy big volumes of U.S. agricultural products, protect U.S. intellectual property rights, and allow more access to its financial services sector. Otherwise, there would be no ‘phase one’ deal, according to the WSJ’s sources.
On Friday, a source confirmed to FOX Business that the U.S. and China had completed a phase one deal, and the tariffs that were set to take effect on December 15 would not be imposed. The teams are still tweaking the details of the partial deal, while negotiations for a phase two deal would take place after the U.S. presidential elections in 2020, according to FOX Business. President Trump is expected to announce some details of a deal later on Friday.
While a partial deal could boost oil demand growth, oversupply continues to be a source of concern, with the International Energy Agency (IEA) warning, again, that a glut is looming next year.
“IEA numbers do call into question how much more upside we could see in prices going into 2020, particularly given the fact that it will not take long for the market to focus on the larger surplus that is estimated over 2Q20, in the absence of OPEC+ action,” Warren Patterson, ING’s Head of Commodities Strategy and Senior Commodities Strategist Wenyu Yao, said on Friday.
By Tsvetana Paraskova for Oilprice.com
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