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Oil Gains After U.S., Chinese Data Improve Demand Outlook


By Ann Koh and Alex Longley

(Bloomberg) Oil held its biggest gain in almost seven weeks after improved U.S. and Chinese economic data aided the demand outlook and Saudi Aramco said it would go ahead with its long-awaited initial public offering.Futures rose 0.8% in New York after jumping on Friday. U.S. Commerce Secretary Wilbur Ross met with Chinese Premier Li Keqiang Monday afternoon at a regional summit in Bangkok, a person familiar with the discussion said. That comes as optimism grows that a trade deal will be reached after bullish data from both China and the U.S. on Friday. Aramco, the world’s biggest oil company, announced its intention to list on Sunday, more than three years after Crown Prince Mohammed bin Salman first raised the idea.

WTI shorts dip after nearing this year's peak

The oil market is taking heart from the signs of strength in the world’s two biggest economies as the nations move closer to a partial trade deal, despite skepticism over whether a more comprehensive agreement can be reached. Hedge funds unwound bets against American crude for the first time in six weeks, but short wagers remain almost triple what they were in mid-September, according to data released Friday.

“The market has been prepared for a bearish oil-repetition of last year, instead it is getting a bullish reverse of that,” SEB chief commodities analyst Bjarne Schieldrop wrote in a report. Bullish drivers range from PMI data to a stalling rig count and falling U.S. interest rates, he said.

West Texas Intermediate for December delivery rose 47 cents to $56.67 a barrel on the New York Mercantile Exchange as of 10:42 a.m. in London. Brent for January settlement added 56 cents to $62.25 a barrel on the London-based ICE Futures Europe Exchange, a six-week high. The global benchmark crude traded at a $5.51 premium to WTI for the same month.

Wilbur Ross said Sunday in Bangkok that the U.S. and China would likely reach a “phase one” trade agreement this month. Further phases of the deal would depend on things involving legislation on the part of China and an enforcement mechanism, he said.

Saudi Arabia is pulling out all the stops to ensure the success of Aramco’s IPO. The kingdom cut taxes on the company for a third time, revealed incentives for investors not to sell and may boost dividends further. Yet the Saudi government has already conceded the company probably isn’t worth the $2 trillion valuation Prince Mohammed has long advocated.

Other oil market news
  • Abu Dhabi decided to list its main Murban crude oil on an exchange, Abu Dhabi Crown Prince Mohammed bin Zayed Al Nahyan said in a tweet.
  • Observed crude and condensate exports from Iran rose slightly in October, with shipments going to China or the East Mediterranean, though most of the country’s tanker fleet remained dark, making assessments difficult, Bloomberg tanker tracking show.
  • The fair value for Saudi Aramco’s IPO is between $1.2 trillion and $1.5 trillion, Sanford C. Bernstein & Co. said in a note.
  • The disruption to the Keystone pipeline can persist for about 20 days, before inventory levels start to threaten tank tops, RBC analysts including Mike Tran wrote in a report.


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