By Heesu Lee and Alex Longley
Futures were little changed in New York after capping a 5.4% weekly gain on Friday. The U.S. said it was close to finalizing the first phase of a trade deal with China, while Beijing said parts of the text for that agreement are “basically completed.” Money managers boosted their net-long positions on West Texas Intermediate crude for the first time since mid-September.
Oil is still down about 12% from an April peak as the trade dispute between Beijing and Washington dented demand and as supplies swelled. Global markets are “awash” in crude thanks to the surge in U.S. output, and the boom looks set to continue, Energy Secretary Rick Perry said in an interview on Sunday.
“If trade talks continue to progress, and we see full agreement to phase 1 of the deal, this should help to improve sentiment further,” ING analysts Warren Patterson and Wenyu Yao wrote in a report.
WTI for December delivery lost 22 cents, or 0.4%, to $56.44 a barrel on the New York Mercantile Exchange as of 10:35 a.m. London time. Brent for December settlement fell 19 cents to $61.83 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark traded at a $5.38 premium to WTI.
Trade negotiators from the two countries “agreed to properly resolve their core concerns and confirmed that the technical consultations of some of the text agreement were basically completed,” China’s Ministry of Commerce said in a statement on Saturday. Presidents Donald Trump and Xi Jinping are seeking to sign a pact in Chile next month.
While net-long positions on WTI crude rose in the week ended Oct. 22, those bets are still at half the level they reached last month. That signals there’s still a lot of skepticism, and it will probably take some major news to shake the market out of its current mood and trigger a sustained rally.
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