Oil was buoyed by the prospect of shrinking U.S. stockpiles and wider financial-market optimism spurred by a new U.S.-Mexico trade pact.
While futures in New York held gains near $69 a barrel, global benchmark Brent crude in London traded above $76 and was at the biggest premium in over two months to the American marker. U.S. crude inventories are forecast to have fallen further last week after slumping more than expected in the seven days ended Aug. 17. Oil is joining risk assets across the globe that are getting a boost after America sealed a bilateral trade deal with Mexico.
“The U.S. reaching a new Nafta agreement with Mexico is improving the overall market sentiment, which has been supporting oil prices,” Ahn Yea Ha, a commodities analyst at Kiwoom Securities Co., said by phone from Seoul. “While we’re seeing some volatility in American crude stockpiles, the most recent drop we’ve seen suggests that the demand is still healthy.”
There are still causes for concern, though. New York futures have traded below $70 this month on concern that trade tensions between the U.S. and China could weaken global economic growth and sap energy demand. American President Donald Trump said it’s not the right time for trade negotiations with the Asian nation, denting expectations for a near-term deal after the breakthrough agreement with Mexico.
Investors are also closely watching whether the Organization of Petroleum Exporting Countries and other producers will boost output to fill in a potential supply loss when renewed U.S. sanctions on Iranian crude exports start in November.
Here are some key oil-market figures, news and events:
West Texas Intermediate crude for October delivery was down 7 cents at $68.80 a barrel on the New York Mercantile Exchange at 7:58 a.m. in London; total volume traded was about 52 percent below the 100-day average.Contract added 15 cents to $68.87 on Monday U.S. crude stockpiles are expected to have fallen 1.49 million barrels last week, according to a Bloomberg survey before government data due WednesdayThey fell 5.84 million barrels the week earlier, against expectations for a 2-million-barrel slide Brent crude for October settlement added 3 cents to $76.24 a barrel on the London-based ICE Futures Europe exchange. Prices on Monday climbed 39 cents to $76.21. The London futures traded at a premium as high as $7.45 to WTI, the most since June 22 December futures in Shanghai gained 0.2 percent to 512 yuan a barrel, after slipping 0.2 percent in the previous session. Saudi Arabia has granted its state-owned oil company a 40-year concession to exploit the kingdom’s hydrocarbon reserves as part of Aramco’s preparation for a potential initial public offering, a person familiar with the matter said.