By Ann Koh and Alex Longley
Crude, and other risk assets including equities, received a boost on Monday amid a thaw in U.S.-China relations. President Donald Trump’s team was said to be privately seeking to reassure American companies that they can still do business with the WeChat messaging app in China.
U.S. benchmark crude futures have been rising — albeit very gradually — this month amid a steady decline in domestic crude and gasoline inventories, and tentative signs that demand is returning. That’s starting to encourage the return of production, however, with drillers in the Permian Basin putting an additional 10 rigs to work last week for the biggest jump in activity this year.
“The situation on the oil market over the next three days is likely to be determined partly by news from the Gulf of Mexico,” said Eugen Weinberg, head of commodities research at Commerzbank AG. “The psychological effect should not be underestimated,” Weinberg said of the impact of the two storms on refining activity and oil production in the U.S.
The shape of the oil futures curve has suggested concerns about oversupply have grown in recent week. On Friday, Brent futures for October traded at their biggest discount to the November contract since May, a structure known as contango. Speculators have also turned less bullish on WTI, last week trimming their bets to the smallest since May.
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