Oil futures moved higher on Wednesday, with prices looking to recoup the losses they suffered over the past two trading sessions.
Prices had traded lower earlier in the session on the back of uncertainty around a so-called phase one trade deal between the U.S. and China, a day after President Donald Trump offered no details on a potential pact in a speech. News reports indicated that a dispute over potential tariff rollbacks remain a hurdle in negotiations.
Still, the Organization of the Petroleum Exporting Countries’ Secretary General Mohammad Barkindo told reporters in Vienna that a trade deal between the U.S. and China would help lift a “dark cloud” over the oil market, Reuters reported Wednesday. He added that he’s “confident” that a deal will be made and that it will be “very positive to the global economy.”
West Texas Intermediate crude for December delivery CLZ19, +0.77% tacked on 37 cents, or 0.6%, to $57.17 a barrel on the New York Mercantile Exchange, giving up an earlier decline. January Brent BRNF20, +0.52% added 31 cents, or 0.5%, to $62.37 a barrel on ICE Futures Europe. The gains were poised to erase the bulk of the losses for the U.S. and global benchmarks seen on Monday and Tuesday.
“As has been the case for much of this year, the initial signs of progress and then subsequent fading of a trade deal on the U.S.-China dispute has influenced oil markets,” said Mihir Kapadia, chief executive of Sun Global Investments, in a note.
In a Tuesday speech at the Economic Club of New York, Trump said a “significant phase one” deal could happen soon, but only if the deal worked to the advantage of U.S. workers and businesses. The Wall Street Journal late Wednesday reported that tariffs were emerging as the main stumbling block to efforts by the U.S. and China to reach a limited trade deal. Specifically, the hurdle surrounds whether the U.S. has agreed to remove existing tariffs as part of a partial phase one deal or whether the U.S. would only cancel tariffs that are set to take effect on Dec. 15, the report said.
Kapadia said a forecast by the International Energy Agency, in its annual outlook, for a slowdown in global oil-demand growth after 2025 was contributed to oil’s earlier negative tone.
A monthly energy outlook report from the Energy Information Administration will be released later Wednesday. Monthly reports from OPEC and the International Energy Agency will come out on Thursday and Friday, respectively.
Late Wednesday, the American Petroleum Institute will issue its weekly U.S. petroleum supply data, while the EIA’s figures come out Thursday. Both were delayed by a day this week due to Monday’s Veterans Day holiday.
On average, analysts expect the EIA to report an increase of 1 million barrels in U.S. crude supplies for the week ended Nov. 8, according to a survey conducted by S&P Global Platts. They also forecast supply declines of 1.7 million barrels for gasoline and 1.6 million barrels for distillates.
Back on Nymex, December gasoline RBZ19, +0.97% was up 1.1% at $1.6313 a gallon, while December heating oil HOZ19, +0.65% added 0.7% to $1.9106 a gallon. December natural-gas futures NGZ19, -1.30% declined 1.3% to $2.586 per million British thermal units.