Oil headed for a second weekly increase as the U.S. and China worked on resolving their trade impasse, and as output cuts by OPEC and its allies balanced surging American supply.
Futures in New York edged higher Friday, taking this week’s increase to 2.7 percent. President Donald Trump will meet with China’s vice premier and top trade negotiator on Friday as the world’s two biggest economies try to resolve their differences. While U.S. crude stockpiles have increased for five straight weeks and production has jumped to a new record, Saudi Arabia and its partners’ output cuts are creating some optimism among traders.
Oil has climbed this year with the Organization of Petroleum Exporting Countries and its allies estimating they delivered 83 percent of promised output reduction last month. Saudi Arabia has cut deeper than it agreed to and has said it expects oil markets to balance by April. Still, American supply growth is tempering that outlook.
“Saudi Arabia is delivering on the cuts it pledged, and I have no doubt they’ll deliver on pledges to do more,” said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB. “It was a production boost from OPEC and an equity sell-off that pushed oil down during the fourth quarter, and now as both of those elements are in reverse prices are going up.”
West Texas Intermediate for April delivery gained 8 cents to $57.04 a barrel on the New York Mercantile Exchange at 10:28 a.m. in London after reaching a three-month high on Thursday. Futures have added $1.47 this week.
Brent for April settlement increased 11 cents to $67.18 a barrel on the London-based ICE Futures Europe exchange, and has risen 92 cents this week. The global benchmark crude was at a $10.12 premium over WTI.
Trump’s meeting with Chinese Vice Premier Liu He was listed on the White House’s daily schedule for 2:30 p.m. in Washington. That comes after reports that negotiators are working on memorandums of understanding — including on agriculture and non-tariff barriers — that would form the basis of a final deal.
Even as the trade talks boosted investor sentiment, nationwide U.S. crude stockpiles rose to 454.5 million barrels — the highest since November 2017 — last week, according to Energy Information Administration data. U.S. production reached 12 million barrels a day in the same period.
Other oil-market news: Crude inventories in Cushing, Oklahoma — the delivery point for the WTI futures contract — recorded the largest weekly build since March 2018, the EIA data show. Goldman Sachs Group Inc. raised its U.S. oil supply growth forecast for 2019 to 1.4 million barrels per day, 17 percent higher than its previous estimate. Oil production at a field jointly owned by Petroleos de Venezuela SA and Eni SpA has been partially halted because of U.S. sanctions. OPEC oil shipments will decline by 260,000 barrels a day to 24.08 million barrels a day in the four weeks to March 9, according to data from tanker tracker Oil Movements.