Oil climbs to highest in three months on renewed US-China trade deal hopes
Demand forecasts may improve if trade tensions ease further
Oil prices extended gains on Friday, hitting three-month highs as the United States and China moved closer to a resolution to the 18-month trade war.
Brent crude, the most widely-used benchmark, climbed 47 cents to $64.67 a barrel, its highest since September 23.
Whereas, US West Texas Intermediate futures rose 34 cents to $59.52 a barrel, the highest since September 16.
"Risk appetite ran wild after [US President Donald] Trump signalled the he made a deal with China and that will only be positive for global demand forecasts for crude," said Edward Moya, senior market analyst at New York-based Oanda, which provides currency solutions to corporate clients.
A slump in the US dollar against the backdrop of a strong pound also helped to boost commodity prices, said Margaret Yang, market analyst at CMC Markets.
"If we see even further progress with the US-China trade war, we could see global GDP rise by half a percentage point in 2020 and that would do wonders for crude demand forecasts," said Mr Moya.
While a trade deal that would end uncertainty could provide a shot in the arm for oil demand in the near term, concerns continue to hover about the demand profile amid ample supplies going forward.
"Lingering doubts about demand will cap the upside on prices," said ANZ Bank in a note on Friday.
Looking further ahead, an International Energy Agency report on Thursday pointed to future pressure on oil prices, predicting a sharp rise in global inventories despite an agreement by the Opec and its allies to deepen output cuts.
That contrasts with Opec's own research, which forecasts a small deficit in the market next year due to Saudi Arabia's supply restraint even before the latest cut agreement takes effect.
Updated: December 13, 2019 04:06 PM