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Oil Near Three-Month High on Cautious Optimism Over Trade Deal

By Elizabeth Low and Grant Smith

(Bloomberg) Oil steadied near a three-month high on cautious optimism that a preliminary trade deal between the U.S. and China will support global fuel consumption.Futures held near $60 a barrel in New York after settling at the highest since Sept. 16 on Friday. The deal involves China buying more American farm products and making new commitments on intellectual property, while the U.S. will suspend new levies and halve existing tariffs on $120 billion of Chinese imports. It’s expected to be signed and released publicly in early January.

Hedge funds raised bullish WTI wagers by most in almost three years

While the partial trade deal leaves most of the tariffs built up over the 20-month conflict in place, it’s adding to a more positive outlook for oil prices, which were already drawing support from deeper-than-expected production cuts announced this month by OPEC and its partners. Hedge funds increased net-bullish wagers on West Texas Intermediate crude by the most in three years in the week through Dec. 10.

“Buoyancy is being generated by optimism about the economy, rising stock markets worldwide in view of the Phase-1 deal in the trade dispute, and a weak U.S. dollar,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt.

See also: OPEC+ Deal Isn’t Worth the Paper It’s Written On: Julian Lee

WTI for January delivery was little changed at $60.05 a barrel on the New York Mercantile Exchange as of 10:22 a.m. London time. It rose 89 cents to $60.07 on Friday, taking its weekly gain to 1.5%.

Brent for February settlement was also little changed, trading at $65.25 a barrel on the London-based ICE Futures Europe Exchange after rising 1.6% on Friday and 1.3% last week. The global benchmark was at a $5.22 premium to WTI for the same month.

Other oil-market news
  • The partial trade deal should help make the global oil market more stable, with Brent averaging $60 to $65 a barrel in 2020, Eni SpA Chief Executive Officer Claudio Descalzi said in a Bloomberg TV interview.
  • One of the hottest trades this year across energy markets is proving one of the trickiest to profit from, making and breaking some of the biggest commodities firms around the world.
  • The U.S. is open to dialogue with Iran even as Washington enforces sanctions against the Islamic Republic, Brian Hook, the U.S. special representative for Iran, said in a Bloomberg TV interview.

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