Futures Movers: Oil climbs as traders await outcome of U.S.-China trade talks

Oil prices climbed on Thursday as traders attempted to make sense of conflicting news reports around U.S.-China trade talks and parsed OPEC’s monthly assessment of global supply and demand.

“It is clear that the markets believe the outcome of the U.S. China trade talks are the most important thing on the planet, and the outcome of these talks will either allow an explosion of global economic growth or a deep dark recession,” said Phil Flynn, senior market analyst at Price Futures Group, in a daily report.

West Texas Intermediate crude for November delivery CLX19, +1.29%  rose 68 cents, or 1.3%, to $53.27 a barrel on the New York Mercantile Exchange, while the global benchmark, December Brent crude BRNZ19, +0.75%  gained 38 cents, or 0.7%, to trade at $58.70 a barrel on ICE Futures Europe.

“Reports are so confused and misleading at present that it is not possible to predict the outcome of the talks,” wrote analysts at Commerzbank. “If they break down, prices can be expected to fall further because concerns about demand would then increase significantly again. If any partial agreement were reached, a relief rally would be on the cards.”

On Thursday, President Donald Trump said in a tweet that he plans to meet with Chinese Vice Premier Liu He on Friday. That provided an added boost to oil prices.

That followed a report Wednesday from Bloomberg News that the White House could implement a previously agreed upon currency deal with China ahead of schedule, and suspend tariff hikes due to take effect next week. The New York Times reported that President Donald Trump greenlighted issuing licenses to some U.S. companies to conduct business with Chinese telecom giant Huawei Technologies.

Earlier, the South China Morning Post had reported that talks earlier this week laying the groundwork for high-level talks due to begin Thursday had made little progress and that China’s main trade delegation would cut short its visit from two days to one.

Read: U.S.-China talks could lead to currency deal or collapse quickly, conflicting reports say

Meanwhile, the Organization of the Petroleum Exporting Countries, in its monthly report, trimmed its forecast for 2019 world oil-demand growth but left its outlook for 2020 unchanged. At the same time, it cut its outlook for non-OPEC supply growth in 2019 and 2020.

During a press briefing on the sidelines of an industry forum in London, OPEC Secretary General Mohammed Barkindo said OPEC and Russia and their allies haven’t ruled out deeper oil production cuts at their next meeting in December, according to a report from S&P Global Platts. The current agreement between OPEC and its allies to cut 1.2 million barrels a day runs through March of 2020.

A report from Energy Information Administration released Wednesday revealed a fourth consecutive weekly rise in U.S. crude-oil supplies. That increase, along with minutes from the Federal Reserve’s September meeting, which showed Fed officials were more worried about the U.S. economy, pushed WTI oil prices a few cents lower by Wednesday’s settlement.

Overall, oil “seems like a very range bound market with steady supplies and slowing demand growth but threats to production still a concern,” Marshall Steeves, energy markets analyst at IHS Markit, told MarketWatch.

Over in Ecuador, continued protests kept oil fields shut, forcing state-owned oil company Petroecuador to declare force majeure on its crude exports, according to news reports.

Ecuador exported around 315,000 barrels a day of crude oil in September 2019, and an average of 392,000 barrels a day for the year-to-date, according to analysts at ING, with nearly half of it going to the U.S. West Coast. Lack of oil supplies from Ecuador could create some shortages at the West Coast in the short term, they said.

In other energy trading activity, November gasoline RBX19, +0.41%  rose 0.4%, to $1.5934 a gallon, while November heating oil HOX19, -0.10%  shed nearly 0.1%, to $1.9183 a gallon.

November natural gas NGX19, +0.54%  rose 0.5% to $2.245 per million British thermal units.

The EIA on Thursday reported that U.S. natural-gas supplies rose 98 billion cubic feet for the week ended Oct. 4, that met with expectations for a 97 billion cubic foot rise, on average, expected by analysts polled by S&P Global Platts.

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