(Bloomberg)—Oil is on track for its third weekly advance as the U.S. and China made more progress toward a phase-one trade deal, bringing some market relief.

Futures in New York eased as much 0.3% Friday, with prices set for a 1.7% increase on the week. China said its negotiation team was in close contact with its American counterparts for the signing of an agreement, which is expected in January. The Asian nation also unveiled a list of tariff exemptions for products including polyethylene.

The price of oil has been rising since early-December when the Organization of Petroleum Exporting Countries and allied producers pledged deeper output curbs. Steps taken by Washington and Beijing to de-escalate an ongoing trade dispute also calmed jitters around slowing global growth and its impact on demand, while U.S. crude inventories fell to the lowest level since Nov. 1.

A surprise draw in U.S. crude inventories and reported progress in the U.S.-China trade talks supported flat prices ahead of the weekend, said John Driscoll, chief strategist at JTD Energy Services Ltd. “The real test of China’s convictions, however, and the significance of this early accord comes next year,” he said.

West Texas Intermediate crude for February delivery was down 6 cents at $61.12 a barrel on the New York Mercantile Exchange at 12:12 p.m. Singapore time. The contract settled 33 cents higher at $61.18 on Thursday.

Brent for February delivery was up 8 cents at $66.62 on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at $5.50 premium to WTI for the same month.

“It’s hard to make a bearish view on oil now,” said Jeffrey Halley, a senior market analyst at Oanda in Singapore. Oil supplies look tighter in the near term, and there will be little trading action during Asia trading hours with the holidays approaching.

Crude is now on track for its best December since 2002. Energy stocks were the best performing sector in the S&P 500 Thursday after the weekly U.S. Energy Information Administration petroleum report showed total stockpiles of crude fell.

—With assistance from James Thornhill and Sharon Cho.

To contact the reporter on this story: Elizabeth Low in Singapore at [email protected]

To contact the editors responsible for this story: Serene Cheong at [email protected], Dan Murtaugh

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