SINGAPORE: Oil prices trickled a fraction lower on Tuesday but remained near a three-month high as investors kept the faith with hopes that a fully fledged US-China trade deal is in the pipeline and set to stoke oil demand in the world’s biggest economies.
Brent crude oil futures had slipped by three cents to $65.31 a barrel by 0122 GMT, while West Texas Intermediate crude was down 4 cents to $60.17 a barrel.
Under a partial trade agreement announced last week, Washington will reduce some tariffs on Chinese imports in exchange for Chinese purchases of agricultural, manufactured and energy products increasing by about $200 billion over the next two years.
“While the partial trade deal leaves most of the tariffs in place, it marks a turning point in the dispute which will eventually lead to fully fledged agreement,” analysts from ANZ Bank said in a note on Tuesday.
JP Morgan and Goldman Sachs have revised their oil price forecasts for the next year upwards, with an Opec-led agreement to curb output further dovetailing with the improving trade outlook between the US and China.
Lower supply next year due to a planned cut by the Organisation of the Petroleum of Exporting Countries (Opec) and associated producers like Russia — a grouping known as ‘Opec+’ — and stronger economic growth expected because of the improved trade outlook between United States and China will combine to tighten the oil supply-demand balance next year, analysts from JP Morgan said.
Also supporting prices, a preliminary poll ahead of reports from the American Petroleum Institute (API) and the Energy Information Administration (EIA) showed expectations that US crude oil inventories likely fell last week.