Picture: 123RF/EVGENI BASHTA
Picture: 123RF/EVGENI BASHTA

London — Oil rose further above $62 a barrel on Tuesday, supported by hopes that US President Donald Trump may signal progress on trade talks with China and lower inventories at a US oil hub.

Concern about slower economic growth and oil demand from the fallout of the 16-month US-China trade dispute sent prices lower on Monday. Trump gives a speech later on Tuesday and investors are keen for an update on the talks.

Brent crude, the global benchmark, was up 30c at $62.48 a barrel by 9.39am GMT, after earlier falling as low as $61.90. US West Texas Intermediate (WTI) crude was up 19c at $57.05.

“The oil market is in a holding pattern,” said Tamas Varga of oil broker PVM. “The next $5-$10 move will be decided by economic and trade considerations.”

Referring to Trump’s speech, Varga said,“He is widely expected to delay his decision to impose tariffs on European car and automotive part imports and will also shed further light on the status of the trade negotiations with China.” 

On Saturday, Trump said talks with China are moving along “very nicely” but the US will only make a deal if it is the right one. He also said there has been incorrect reporting about US willingness to lift tariffs.

Adding further support, US data showed that crude inventories at Cushing, the delivery point for WTI, fell about 1.2-million barrels in the week to November 8, traders said, citing market intelligence firm Genscape. Cushing inventories had grown for five weeks in a row up to November 1, according to government data.

Brent has risen 16% in 2019, supported by a supply-limiting pact by oil cartel Opec and allies, including Russia. The producers meet on December 5-6 to decide whether to extend the deal.

Oman, one of the outside producers working with Opec, said on Monday that the alliance will probably extend the agreement but is unlikely to increase the size of the supply cut.

In a further supportive supply-side development, Goldman Sachs also cut its 2020 forecast for growth in US oil production, which has surged in recent years and helped keep a lid on prices.

The bank cut its growth forecast for next year by 100,000 barrels per day (bpd) to 600,000 bpd over 2019.

Reuters