(Bloomberg) -- Oil steadied near a three-month high on cautious optimism that a preliminary trade deal between the U.S. and China will support global fuel consumption.
Futures held near $60 a barrel in New York after settling at the highest since Sept. 16 on Friday. The deal involves China buying more American farm products and making new commitments on intellectual property, while the U.S. will suspend new levies and halve existing tariffs on $120 billion of Chinese imports. It’s expected to be signed and released publicly in early January.
While the partial trade deal leaves most of the tariffs built up over the 20-month conflict in place, it’s adding to a more positive outlook for oil prices, which were already drawing support from deeper-than-expected production cuts announced this month by OPEC and its partners. Hedge funds increased net-bullish wagers on West Texas Intermediate crude by the most in three years in the week through Dec. 10.
“Buoyancy is being generated by optimism about the economy, rising stock markets worldwide in view of the Phase-1 deal in the trade dispute, and a weak U.S. dollar,” said Eugen Weinberg, head of commodities research at Commerzbank AG (DE:CBKG) in Frankfurt.
See also: OPEC+ Deal Isn’t Worth the Paper It’s Written On: Julian Lee
WTI for January delivery was little changed at $60.05 a barrel on the New York Mercantile Exchange as of 10:22 a.m. London time. It rose 89 cents to $60.07 on Friday, taking its weekly gain to 1.5%.
Brent for February settlement was also little changed, trading at $65.25 a barrel on the London-based ICE Futures Europe Exchange after rising 1.6% on Friday and 1.3% last week. The global benchmark was at a $5.22 premium to WTI for the same month.
