Oil prices on Friday climbed to a two-month high as China was said to offer a trillion-dollar buying spree to defuse trade tensions with the world’s biggest economy.
Futures climbed 3.3 percent in New York to cap a third straight weekly increase.
Bloomberg News reported that China proposed a six-year shopping binge for US goods, diminishing concerns about a brake on economic growth.
Meanwhile, US factory output last month expanded by the most in 10 months and the International Energy Agency (IEA) forecast another year of growth in oil demand.
Signs of progress on trade “have greased the wheels in commerce globally,” Chicago-based Path Trading Partners chief market strategist Bob Iaccino said in an interview. “The perception of diminished demand, which was turning up in the economic numbers, is turning around and that’s going to bring the speculators back.”
After ending last year in free fall, oil is off to its best start for a year since 2001, gaining 18 percent since the start of this month as worries about global oversupply fade.
OPEC production last month fell by the most in almost two years after the cartel and other top exporters agreed to rein in output, data released this week showed.
In the US, explorers slowed drilling this week by the biggest margin in almost three years.
West Texas Intermediate crude for delivery next month rose US$1.73 to settle at US$53.80 per barrel on the New York Mercantile Exchange.
Brent for March settlement advanced 2.5 percent to close at US$62.70 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at an US$8.66 premium to West Texas Intermediate for March.
Crude demand is on course to grow this year, supported by lower prices, the Paris-based IEA said on Friday.
Schlumberger Ltd offered more reassuring news for those worried about a glut of US crude.
The world’s biggest oilfield service company said that North American shale drillers were likely to slow activity in the coming year as their finances come under pressure.
Production from OPEC’s 14 members last month sank by 751,000 barrels per day, with just more than half of the reduction accounted for by Saudi Arabia, a report from the group’s secretariat said.
It was the biggest cut since the organization kicked off a previous round of curbs in early 2017.
“OPEC’s releasing information on how much they’ve cut and Saudi Arabia keeps talking about how much more they’re going to cut,” said Ellen Wald, president of Transversal Consulting, an energy and geopolitics consultancy in Jacksonville, Florida.
Prices are likely to keep climbing at least until April, she said, when the US is due to decide whether to extend waivers against sanctions for buyers of Iranian oil.
In other commodities trading, wholesale gasoline rose 1.6 percent to US$1.45 per gallon and heating oil added 1.6 percent to US$1.92 per gallon. Natural gas jumped 2 percent to US$3.48 per 1,000 cubic feet.
Gold dropped 0.8 percent to US$1,282.70 per ounce and silver fell 0.9 percent to US$15.40 per ounce. Copper rose 1.5 percent to US$2.72 per pound.
Additional reporting by AP
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