Oil erased most of its loss for the week, as the price gain after the signing of the U.S.-China trade agreement offset signs that supplies remain plentiful.
The phase-one deal committed Beijing to $52.4 billion in additional purchases of American energy in the next two years. The easing of trade hostilities, combined with a solid start to American earnings season and some promising economic date from China, shows signs of stabilizing the oil market after a sharp drop last week.
“The signing of the U.S.-China trade deal has given optimism for a revival in global manufacturing, and thus stronger oil demand growth,” said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB. “This is what gives the oil price some vigor.”
West Texas Intermediate futures for February delivery added 34 cents to $58.86 a barrel on the New York Mercantile Exchange on Friday morning. The front-month contract has lost 0.3% this week, steadying after a drop of 6.4% in the prior period.
Brent for March settlement rose 35 cents to $64.97 on the ICE Futures Europe exchange in London after climbing 1% on Thursday. That put its premium over WTI for the same month at $6.09 a barrel.
The International Energy Agency noted on Thursday that global markets have a “solid base” of inventories and climbing supplies from outside the OPEC cartel, even as elevated tensions in the Middle East endanger production from Iraq and elsewhere. A big jump in American oil-product stockpiles last week underscored that the shale boom continues.
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