Crude oil futures ticked higher during mid-morning trade in Asia on Wednesday, underpinned by optimism over US-China trade talks that extended into a third day.
At 10:32 am Singapore time (0232 GMT), ICE March Brent crude futures were up 60 cents/b (1.02%) from Tuesday’s settle to $59.32/b, while the NYMEX February light sweet crude contract was 67 cents/b (1.35%) higher at $50.45/b.
“Crude continues to extend gains as early reports from Beijing regarding trade negotiations are fueling optimism around successful trade talks between the US and China,” OANDA’s head of trading Stephen Innes said in a note Wednesday.
Analysts said that market sentiment got a boost following US President Donald Trump’s tweet on Tuesday that showed signs of improving US-China trade relations.
“Talks with China are going very well!” Trump said in a tweet. Meanwhile, crude futures were also bolstered by a large draw in crude inventories reported by the American Petroleum Institute, though further gains were countered by a build in gasoline and distillates stocks.
According to analyst reports quoting API data released Tuesday, US crude inventories had fallen 6.1 million barrels for the week ended January 4.
“The [US Energy Information Administration] report would also be of interest for oil prices after the private API 6.1-million-barrel drawdown failed to swing prices above key resistances, with gasoline build-up underscoring,” IG market strategist Pan Jingyi said.
“The waiting game is on for Asia markets, though early movers retained the tone from before, chalking up moderate gains in the morning,” Pan added. Oil prices have been on a steady ascend, reflecting the stronger sentiment seen in global markets, as OPEC and its allies agreed on production cuts.
“Crude oil prices continued to march higher, with investors becoming increasingly confident that the OPEC cuts would tighten the market,” ANZ analysts said in a note Wednesday. According to shipping data, industry officials and analysts surveyed Tuesday by S&P Global Platts, OPEC’s December crude production had dropped 630,000 b/d month on month to a fresh six-month low of 32.43 million b/d.
Still, Saudi Arabia, Iraq and the UAE, OPEC’s three largest producers, have more cutting to do in order to become compliant with their individual quotas. As of 0232 GMT, the US Dollar Index was down 0.09% at 95.425. Platts.com
