Oil Hits 9-Week High as China Extends Olive Branch to the U.S.

Jacquelyn Melinek
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Oil Hits 9-Week High as China Extends Olive Branch to the U.S.

(Bloomberg) -- Oil climbed to a nine-week high as China signaled a renewed desire to settle the trade war with the U.S. that has disrupted global energy demand.

Futures rose 2.8% in New York on Thursday. Chinese Vice Premier Liu He invited U.S. President Donald Trump’s top trade negotiator to discuss the long-running dispute. In a Beijing speech, Liu also disclosed domestic economic reforms that touch on some of Trump’s key demand, according to people who attended the event and asked not to be identified.

Bullish sentiment also was fueled among chart watchers by crude’s rise above the 200-day moving average, according to Bart Melek, head commodity strategist at Toronto-Dominion Bank.

“We tend to respond when the White House or Beijing says something,” Melek said. The price rise may in part also stem from “technical variables.”

Oil has declined about 12% since touching a 2019 high in late April amid ample worldwide crude supplies and threats to worldwide demand for petroleum-based fuels. In the U.S., a potential fracking ban on federal lands has become a hot topic among Democratic presidential candidates, spurring concern that some shale output could be imperiled.

West Texas Intermediate for January delivery rose $1.57 to settle at $58.58 a barrel on the New York Mercantile Exchange, the highest close since Sept. 23.

Brent for January settlement rose $1.57 to close at $63.97 on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $5.39 premium to WTI.

The prospect of a trade deal came just hours after the U.S. government said crude stockpiles at a key storage hub dwindled by the most in three months. Diesel inventories also dropped, the Energy Information Administration said in a report on Wednesday.

“The market believes the talk of oversupply is overdone,” Melek said.

To contact the reporter on this story: Jacquelyn Melinek in New York at jmelinek@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Joe Carroll, Christine Buurma

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