Oil rose from a two-week low as a tentative accord to prevent another U.S. government shutdown reassured investors and boosted financial markets.
Crude futures rose 1.6 percent in New York, after sliding on Monday to the lowest settlement since Jan. 28. Congressional negotiators said Monday in Washington they had reached a deal in principle on border security to avoid closure of the federal government. Saudi Arabia will continue to cut its output deeper than required by the OPEC+ deal, going down to 9.8 million barrels a day next month, Energy Minister Khalid Al-Falih said in an interview with the Financial Times.
Crude’s rally has fizzled in February on concern the U.S. and China won’t be able to defuse their trade war. A strengthening dollar has also reduced the appeal of commodities priced in the currency. Prices have shown limited response to output reductions by the Organization of Petroleum Exporting Countries and its allies, as well as an escalating political crisis and sanctions against Venezuela.
“The broader market sentiment, risk on and risk off, continues to influence oil prices,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “With high OPEC compliance and healthy oil demand, inventory dynamics might surprise and support prices over the coming months.”
West Texas Intermediate crude for March delivery rose 86 cents to $53.27 a barrel on the New York Mercantile Exchange at 6:29 a.m. The contract fell 31 cents on Monday to $52.41.
Brent for April settlement added $1.12 to $62.63 a barrel on the London-based ICE Futures Europe exchange. It fell 1 percent to settle at $61.51 on Monday. The global crude benchmark traded at a $9.02 premium to WTI.
Senate Appropriations Chairman Richard Shelby said lawmakers agreed on all seven spending bills needed to keep government agencies open. The news spurred gains in European and Asian stocks on Tuesday as investors were worried another partial shutdown would be a drag on U.S. growth.
Meanwhile, U.S. and Chinese trade negotiators are meeting in Beijing this week to try and reach a deal before a March 1 deadline when higher American tariffs on Chinese imports take effect. President Donald Trump wants to meet Chinese President Xi Jinping “very soon,” White House adviser Kellyanne Conway said Monday on Fox News, an optimistic sign for investors who are becoming increasingly concerned there won’t be an agreement.
U.S. crude stockpiles are projected to rise for a fourth week, the longest such run since November, according to a Bloomberg survey before data due Wednesday. Inventories expanded by 2.4 million barrels in the week through Feb. 8, according to the Bloomberg survey before the Energy Information Administration data.
Other oil-market news: It’s too early to make a definite judgment whether a slower global economy means the International Energy Agency should revise its oil demand growth forecasts lower, Executive Director Fatih Birol said in a Bloomberg television interview in Berlin. U.S. gasoline at less than $2 a gallon is vanishing, with the number of retail stations that price it at $1.99 or less falling to 24 percent, the lowest since Dec. 21 Citgo, the U.S. refining unit of PDVSA, is getting help from China to supply oil for its Gulf refineries after U.S. sanctions cut off supplies from Venezuela BP Plc CEO Bob Dudley says he’s comfortable with the current oil price and that “right now the market feels balanced”