Oil traded above $66 a barrel as global trade tensions showed signs of easing, countering concerns that U.S. crude stockpiles may have resumed their expansion last week.
Futures in New York rose 1.1 percent, remaining near the year’s highest close set in January at $66.14. A resurgence in risk appetite has helped lift markets from equities to commodities after a report that the Trump administration is urging China to lower tariffs on cars during talks to calm trade tensions. Yet a small estimated increase in U.S. inventories is keeping a lid on oil-price gains.
Oil has recovered near January highs after President Donald Trump last week appointed John Bolton as his national security adviser, signaling the U.S. may pursue a more hard-line approach against Iran and disrupt outflows from the OPEC member. While global stockpiles are tightening in a sign that the Organization of Petroleum Exporting Countries’ production cuts are working, fears still remain that surging U.S. production could thwart those efforts.
“Oil prices gained and now they’re testing this key resistance level” of the January high, said Hans Van Cleef, senior energy economist at ABN Amro. “We’re waiting for the inventory data to see if it can push prices higher. Markets expect them to remain little changed, so any surprise drop could do the trick.”
West Texas Intermediate crude for May delivery traded at $66.26 a barrel on the New York Mercantile Exchange, up 71 cents, at 8:39 a.m. New York time, after falling 33 cents on Monday. Total volume traded was about 31 percent below the 100-day average.
Brent for May settlement rose 85 cents to $70.97 a barrel on the London-based ICE Futures Europe exchange, after dropping 33 cents on Monday. The global benchmark traded at a $4.64 premium to WTI.
European stocks rallied, tracking gains across Asia as investors began to recalibrate the chances of an all-out trade war. U.S. Treasury Secretary Steven Mnuchin said on Fox News that he’s optimistic his country can reach a truce with China on trade.
U.S. stockpiles may have added 450,000 barrels last week, rising for the fourth time in five weeks, according to a Bloomberg survey before Energy Information Administration data due Wednesday. A week earlier, U.S. production increased for a fourth week to a fresh record.
Other oil-market news:
In China, yuan-denominated oil futures declined 1.7 percent to end at 426.4 yuan a barrel on Tuesday. The contract for September delivery slipped in Shanghai after closing at 433.8 yuan in its debut on Monday. The chief executive officer of Saudi Aramco defended prospects for an initial public offering of the giant oil company in the face of investor skepticism and government prevarication on when and where it will happen.