Oil on Friday pared a weekly gain as investors weighed signs of progress in a prolonged US-China trade war that has undermined global crude demand.
While on Friday futures in New York lost 1.1 percent, oil was still up 0.6 percent for the week.
The US and China have agreed to roll back tariffs on each other’s goods in phases as they work toward a deal, both sides said.
Renewed trade optimism offset swelling US crude inventories and indications that OPEC and its allies would not make deeper cuts to supply.
Oil is still down almost 15 percent since an April peak as the trade spat sapped crude consumption and global supplies expanded.
OPEC and its partners will likely keep output steady when they meet next month as markets are on track to rebalance, Goldman Sachs Group Inc and Trafigura Group Ltd said.
An announcement on a completed “phase one” trade deal “would send oil prices significantly higher,” CMC Markets chief market strategist Michael McCarthy said in Sydney, predicting that West Texas Intermediate crude could climb as high as US$65.
“But, as we’ve seen many times, trade talk sentiment reverses very sharply and we are vulnerable to further falls in the near term,” McCarthy added.
West Texas Intermediate for delivery next month declined US$0.60 to US$56.55 per barrel on the New York Mercantile Exchange. The contract rose US$0.80 to US$57.15 on Thursday.
Brent for January settlement fell US$0.53, or 0.9 percent, to US$61.76 per barrel on the London-based ICE Futures Europe Exchange. The contract is up 0.3 percent this week.
The global benchmark crude traded at a US$5.19 premium to West Texas Intermediate.
Rolling back tariffs would pave the way for a de-escalation in the trade war, which has cast a shadow over the world economy. China’s key demand since the start of negotiations has been the removal of punitive tariffs, which by now apply to the majority of its exports to the US.
OPEC and its partners are more likely to stick to their current output targets and encourage members to comply more fully when they meet next month, delegates across the coalition said.
While demand for commodities is “terrible,” non-OPEC supply growth is slowing as excessive capital expenditure diminishes, Goldman head of commodities research Jeff Currie said on Thursday at the Bloomberg Commodity Investor Forum in London.
In other energy trading, wholesale gasoline fell US$0.01 to US$1.63 per gallon and heating oil was unchanged at US$1.92 per gallon, while natural gas rose US$0.02 to US$2.79 per 1,000 cubic feet.
Gold rose US$2.90 to US$1,461.30 per ounce and silver rose US$0.19 to US$16.78 per ounce, while copper fell US$0.04 to US$2.68 per pound.
Additional reporting by staff writer
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