(Bloomberg) -- Oil edged higher in light volume as U.S. President Donald Trump said a preliminary trade deal with China is “done” and ahead of government data expected to show another crude stockpile decline.
Futures rose 0.8% in New York Tuesday. Trump suggested that the U.S. and China will sign a trade agreement ahead of a meeting with him and President Xi Jinping. American crude inventories fell by 1.7 million barrels last week, according to a Bloomberg survey before Energy Information Administration data on Friday and industry figures due later Tuesday.
Oil is on course for the best month since January after the U.S. and China made a breakthrough on an initial trade deal and the Organization of Petroleum Exporting Countries and its partners agreed to deepen output cuts. American crude inventories are coming off their highs even as the nation pumps near-record levels and shale explorers revive drilling.
“The speculative community is going to push as hard as they can to rally the market ahead of an expected storage draw on Friday,” said Robert Yawger, futures director at Mizuho Securities USA LLC in New York.
West Texas Intermediate for February delivery rose 51 cents to $61.03 a barrel on the New York Mercantile Exchange as of 10:45 a.m. local time. The contract added 8 cents on Monday.
Brent for February settlement gained 75 cents to $67.14 a barrel on the ICE (NYSE:ICE) Futures Europe Exchange, after rising 25 cents on Monday. The global benchmark traded at a $6.12 premium to WTI.
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Saudi Arabia and Kuwait also agreed to resume oil production in their shared “neutral zone” more than four years after halting output. The oil fields can produce as much as 500,000 barrels a day -- more than each of OPEC’s three smallest members pumped last month. Chevron Corp. (NYSE:CVX) expects full production at the Wafra field to be restored within 12 months. A resumption on that timetable would be unlikely to add significant amounts of oil to the market within the current duration of the OPEC+ production deal, which runs until the end of March.
Higher production from non-OPEC nations and a mixed outlook for demand are likely to keep oil prices in check in 2020. WTI will average $58.50 a barrel next year, according to the median of analyst estimates compiled by Bloomberg since the OPEC+ meeting in early December.
