Oil retreated after rising above $60 a barrel for the first time in almost three months as investors attempted to assess the partial trade deal reached between the U.S. and China.
Futures briefly climbed as much as 2.2% in New York on Friday as Chinese officials said the countries agreed not to impose tariffs set to go into effect Dec. 15. But the rally fizzled after U.S. President Donald Trump tweeted that the 25% tariffs will remain in place. Equities markets swung between gains and losses as the news broke.
Crude is poised for a modest gain this week due to the positive sentiment around the trade deal, having surged by more than 7% last week as OPEC and its allies announced a surprise production cut. Yet as the details of the U.S.-China agreement remain scarce, and concerns linger over whether OPEC will follow through on its agreement, the sources of support for prices appear fragile.
“Risk appetite among financial investors is now likely to remain high thanks to the deal between the U.S. and China,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. Yet “the oil market risks facing a massive oversupply and a pronounced inventory build, at least in the first half of the year.”
West Texas Intermediate for January delivery rose 43 cents to $59.61 a barrel on the New York Mercantile Exchange as of 11:17 a.m. local time. Brent for February settlement advanced 0.8% to $64.72 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark traded at a $5.18 premium to WTI for the same month.
