Oil prices extended gains on Friday, scaling three-month highs as the U.S. and China moved closer to a resolution to the 18-month trade war between the world’s two biggest economies that has raised questions about global demand for crude.
Brent futures LCOc1 climbed 47 cents, or 0.7 per cent, to 64.67 dollars a barrel by 0730 GMT, its highest since Sept. 23.
West Texas Intermediate (WTI) crude CLc1 was up 34 cents or 0.6 per cent, to 59.52 dollars a barrel, the highest since Sept. 16.
“Risk appetite ran wild after Trump signalled that he made a deal with China and that will only be positive for global demand forecasts for crude,” said Edward Moya, Senior Market analyst at OANDA.
A slump in the U.S. dollar against the backdrop of a strong pound also helped to boost commodity prices, said Margaret Yang, a market analyst at CMC Markets.
Mirroring investor optimism, Asian share markets jumped to multi-month highs on Friday after Wall Street surged to record highs on Thursday.
“If we see even further progress with the U.S.-China trade war, we could see global GDP rise by half a percentage point in 2020 and that would do wonders for crude demand forecasts,” said Moya.
While a trade deal that would end uncertainty could provide a shot in the arm for oil demand in the near term, concerns continue to hover about the demand profile amid ample supplies going forward.
“Lingering doubts about demand will cap the upside on prices,” said ANZ Bank in a note on Friday.
In the meantime, the White House has agreed to suspend some tariffs on Chinese goods and reduce others in return for Beijing’s pledge to hike purchases of U.S. farm products in 2020, sources said on Thursday.
However, the White House didn’t release any official statement, raising questions about whether the terms had been agreed by both sides. (Reuters/NAN)