Oil prices rose on Thursday after a Reuters’ report showed OPEC and its allies are likely to extend output cuts until mid-2020 while fresh reports emerged that China has invited U.S. negotiators for a new round of talks.

Oil rises on reports that OPEC might extend cuts, U.S.-China talks to continue

Source: Reuters

Brent crude futures rose 69 cents, or 1%, to $63.09 a barrel, while West Texas Intermediate crude futures rose 82 cents, or 1.4%, to trade at $57.84.

Both benchmarks had fallen earlier in the session.

To support oil prices, OPEC and its allies are likely to extend output cuts when they meet next month with non-OPEC producer Russia, according to OPEC sources.

The sources told Reuters that formally announcing deeper cuts looked unlikely for now although a message about better compliance with existing curbs could be sent to the market.

Russian President Vladimir Putin said on Wednesday Russia and OPEC had “a common goal” of keeping the oil market balanced and predictable, and Moscow would continue cooperation under a global deal cutting oil supply.

Amid rising tensions between the United States and China, U.S. President Donald Trump is expected to sign two bills passed by Congress intended to support protesters in Hong Kong, a move likely to enrage China.

A Reuters report said completion of a “phase one” U.S.-China trade deal could slide into next year.

“Under this scenario, both equities and oil are expected to come under pressure. As talks hit a snag, an upside breakout from the current trading range all of a sudden has become less imminent,” Tamas Varga of oil brokerage PVM said.

However, the Chinese commerce ministry said that China would strive to reach a “phase one” trade agreement with the United States.

The Wall Street Journal also reported on Thursday, citing unnamed sources, that China had invited top U.S. trade negotiators for a new round of talks in Beijing.

Trade conflict, weak business investment and persistent political uncertainty are weighing on the world economy, the Organisation for Economic Cooperation and Development (OECD) warned on Thursday, noting the global economy is growing at the slowest pace since the financial crisis.

“In the short term, oil demand is directly tied to global GDP growth and thus the ongoing uncertainty surrounding U.S.-China trade talks will hamper global growth,” Ehsan Khoman, head of MENA research and strategy at MUFG, said.

Legal Notice