Oil settled above $61 a barrel amid light volume as US 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 1% in New York Tuesday to close at a three-day high. Trump suggested that the US and China will sign a trade agreement ahead of a meeting with him and President Xi Jinping. American crude inventories fell by 1.5 million barrels last week, according to a Bloomberg survey before Energy Information Administration data on Friday and industry figures due later Tuesday.
With prices on the rise since October, the market is heading into Christmas in a completely different state from a year ago. Implied volatility, a measure of how much traders are willing to pay for protection against price swings, is less than half of what it was a year ago.
Oil is on course for the best month in nearly a year after the US 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 settled 59 cents higher at $61.11 a barrel on the New York Mercantile Exchange. The contract is set for biggest quarterly gain since the first quarter.
Brent for February settlement gained 81 cents to $67.20 a barrel on the ICE Futures Europe Exchange, a 3-month high. The global benchmark traded at a $6.09 premium to WTI.
Saudi Arabia and Kuwait also agreed to resume oil production in their shared “neutral zone" more than four years after halting output. Chevron Corp. expects full production at the Wafra field to be restored within 12 months, although that timetable won’t likely 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.
This story has been published from a wire agency feed without modifications to the text.