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Oil Rises Again on Hopes for Trade Talks

Published 04/11/2019, 18:02
Updated 04/11/2019, 20:55
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Investing.com - China is taking its time in advancing trade negotiations with the U.S., but markets, including oil, seem to be in a hurry in assuming the partial trade deal the White House wants is all but done.

Prices of West Texas Intermediate, the benchmark for New York-traded crude, and London’s Brent, the global gauge for oil, rose again on Monday on continued optimism over Friday’s announcement by China that it had achieved consensus on difficult trade issues with the U.S. and that more talks will follow.

Wall Street’s major stock indices all hit record highs on Monday, reacting also to weekend remarks by Commerce Secretary Wilbur Ross that licenses for U.S. companies to sell components to China's Huawei would come "very shortly." U.S. stocks have been riding the wave of strong third-quarter earnings and strong jobs growth in October anyway.

{{WTI}} settled up 34 cents, or 0.6%, at $56.54 per barrel. It gained 3.7% on Friday and was up as much as 2.2% at one point on Monday.

Brent climbed 44 cents, or 0.7%, to close the regular New York trading session at $62.13. It settled up 3.5% on Friday and rose as much as 1.8% during Monday’s highs.

“You’d think that with all the history of the on-again, off-again deal between China and the U.S., there’d be some caution over the uptrend in oil,” said John Kilduff, partner at New York energy hedge fund Again Capital.

“But it appears that both sides are trying to push their stock markets up with the hopes of a deal, even while they’re still talking,” Kilduff added. “And oil is getting caught in that momentum.”

China's President Xi Jinping and U.S. President Donald Trump have been in touch all along on the trade negotiations between the two sides, Chinese Foreign Ministry spokesman Geng Shuang said in remarks at a news briefing in Beijing on Monday, Reuters reported.

Oil bulls also saw things differently.

“All of a sudden it seems all is right with the oil world,” said Phil Flynn, senior market analyst at the Price Futures Group brokerage in Chicago. “It is time to get hedged if you are not already. Despite all of the talk of slowing demand, the truth is, the (oil) product(s) market is tighter than it has been in years.”

But Kilduff said WTI has entered stronger resistance with Monday’s breach of $57 per barrel at its highs and a cross of the 200-day moving average of $55.51.

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