Oil rises on hopes of US-China trade pact
US President Donald Trump said the two sides were in the "final throes" of reaching an agreement
Oil prices were near two-month highs amid optimism that the US and China were in the final stages of sealing a 'phase one' trade pact.
Brent, the most widely-used benchmark, edged up 0.20 per cent and was trading at $64.40 per barrel at 1.43pm UAE time, while West Texas Intermediate was up 0.10 per cent at $58.47 per barrel.
"We’re in the final throes of a very important deal," US President Donald Trump told reporters on Tuesday.
“It’s going very well," he added.
The trade dispute between the world's two largest economies has slowed global growth and lowered expectations for oil demand. The two sides have been working towards a detente, with China agreeing to enforce stricter penalties for intellectual property rights violations by its firms.
Oil prices have proven resilient to geopolitical tensions such as tanker attacks in the Strait of Hormuz and a strike on Saudi Aramco's facilities in September, with the trade war weighing down prices.
Opec+, the alliance led by major producers such as Saudi Arabia and Russia, has also been restricting supply by 1.2 million barrels per day since January. The alliance is set to meet early next month to discuss the possibility of extending cuts beyond the proposed March 2020 timeline. Analysts have called for deeper cuts as supply continues to grow.
New small-scale capacity upstream additions should not be underestimated, consultancy JBC Energy said in a note on Wednesday.
A number of upstream projects below 50,000 bpd reached financial close this year, a part of the market that has dominated the landscape since the oil price crash in 2014.
"Capacity additions up to 50,000 bpd hit the highest level on record this year, at least since 2011," the consultancy said.
"Given that expected capacity additions are not too far away from the average of the 2015-17 period, whilst Opec+ is severely constraining its output, it is hard to argue for an oil market that turns to sustained tightness over the medium term," the note said.
Stunted supply growth from US shale due to lack of investment could help to tighten the market into next year, JBC Energy observed.
Updated: November 27, 2019 05:16 PM