Oil traded below $57 a barrel as output from OPEC member Libya recovers and investors assess mixed signals on the prospect for a trade deal between the U.S. and China.
Futures in New York rose as much as 0.7 percent after dropping 1 percent on Friday. Libya’s production is said to be on track this month to hit an almost six-year high after the country restarted its biggest field on Tuesday. The top White House economic adviser, Larry Kudlow, said he’s “optimistic” about a trade pact despite Beijing’s push-back against demands made by Washington. Meanwhile, signs of slowing U.S. shale growth supported prices.
Oil has traded in a tight range above $55 this month, after rallying over 30 percent from December-lows on output curbs by the Organization of Petroleum Exporting Countries and its allies and unexpected supply disruptions in some member states. Meanwhile, U.S. production remains at a record high, even as the nation’s rig count fell to a 10-month low. Uncertainty over a trade tiff between the world’s top two economies has also weighed on prices.
“The impression the two sides are making progress in talks is raising expectations trade tensions will deescalate,” Satoru Yoshida, a commodity analyst at Rakuten Securities Inc. in Tokyo., said by phone. “While crude prices are currently trading in a small range, it could rise beyond that level if oil producing countries start signaling they will agree to extend production cuts at a meeting in April.”
West Texas Intermediate for April delivery rose as much as 41 cents to $56.48 a barrel on the New York Mercantile Exchange and traded at $56.42 at 4:26 p.m. in Tokyo. The contract fell 59 cents to $56.07 on Friday.
Brent for May settlement added 36 cents to $66.10 a barrel on the London-based ICE Futures Europe exchange. The contract fell 56 cents to $65.74 on Friday. The global benchmark crude traded at a $9.34 premium to WTI for the same month.
Libya is pumping 1.17 million barrels a day, according to Bloomberg calculations of data from several people with knowledge of field operations. The nation resumed production in its Sharara oil field after it was shut in December amid an ongoing conflict among rival factions.
Meanwhile, investors across financial markets continue to seek clarity on whether the U.S. and China can resolve a trade conflict. The Donald Trump administration is “making great progress” in negotiations with China, Kudlow said on “Fox News Sunday.” He said the American president and his Chinese counterpart Xi Jinping may meet to ink a pact at some point—possibly in March or April.
In the U.S. oil market, working rigs fell by nine to 834 last week, the lowest since May, according to data released Friday by oilfield-services provider Baker Hughes. That’s the third consecutive decline.