LONDON (Reuters) – Oil rose further above $65 a barrel on Tuesday, supported by hopes that the U.S.-China trade deal will bolster oil demand in 2020 and the prospect of lower U.S. crude supplies.
The “Phase One” agreement between the world’s two largest economies has been “absolutely completed”, Larry Kudlow, a top White House adviser, said on Monday, adding that U.S. exports to China will double under the deal.
Brent crude LCOc1, the global benchmark, rose 30 cents to $65.64 a barrel by 1430 GMT, while U.S. West Texas Intermediate crude CLc1 added 37 cents to $60.58.
“Christmas has definitely arrived early for oil producers,” said Craig Erlam, analyst at brokerage OANDA. “Brent could get closer to $70 before the rally starts to run on fumes.”
The prolonged trade dispute has been a dampener for oil demand and weighed on prices. Banks including JP Morgan and Goldman Sachs have revised up their 2020 price forecasts in the wake of the improving trade outlook and a new OPEC-led agreement to curb output.
“The risk-on tone is still noticeable,” said Tamas Varga of oil broker PVM. “The next event to look out for is the weekly U.S. oil inventory statistics.”
Supply reports from oil industry group the American Petroleum Institute and the government’s Energy Information Administration are expected to show U.S. crude inventories probably fell last week.
The first of the two, from the API, is scheduled for release at 4:30 p.m. EST (2130 GMT) on Tuesday. The government report follows on Wednesday.
Also supporting prices, the Organization of the Petroleum of Exporting Countries and allies such as Russia – a group known as OPEC+ – are making a further oil supply cut of 500,000 barrels per day from Jan. 1 to support the market.
This comes on top of the existing deal to trim supply by 1.2 million bpd that came into effect on Jan. 1 this year.
Additional reporting by Jessica Jaganathan; editing by Louise Heavens and David Evans