Oil futures finished climbed on Thursday after China and the U.S. agreed to lift existing tariffs if a partial trade deal is struck soon, signaling that trade talks are progressing and providing an upbeat backdrop for crude demand.
January Brent crude BRNF20, +1.20% picked up 68 cents, or 1.1%, to hit $62.42 a barrel on ICE Futures Europe, following a its 1.9% skid.
On Thursday, Gao Feng, a ministry spokesperson for China’s Commerce Ministry, said Beijing and Washington agreed to the simultaneous removal of import duties recently imposed as the parties move closer to a so-called phase one trade pact. The report helped to bolster sentiment for assets considered risky, including stocks, particularly after reports on Wednesday signaled that a meeting between President Donald Trump and Chinese President Xi Jinping would be delayed until next month.
Trade clashes between the Beijing and Washington have been a focus for energy traders because the long-running dispute between the two global superpowers threatens to hurt appetite for crude and its byproducts by hurting economic growth. The dispute centered on import duties and intellectual-property rights has contributed to slowing global economic growth.
Peter Cardillo, chief market economist at Spartan Capital Securities, in a daily research note said “it’s all about positive trade developments coming to fruition lifting a major negative threat to the economy.
Crude-oil investors also have been focused on signs of growing U.S. oil inventories which has weighed on prices.
The Energy Information Administration on Wednesday reported that U.S. crude supplies climbed by 7.9 million barrels for the week ended Nov. 1. Crude supplies were forecast to increase by 2.7 million barrels, according to analysts polled by S&P Global Platts. The American Petroleum Institute on Tuesday reported a rise of roughly 4.3 million barrels.