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Oil prices surge after U.S., China suspend trade hostilities

Reuters  |  SINGAPORE 

By Gloystein

SINGAPORE (Reuters) - prices surged on Monday after the and agreed to a 90-day truce in their trade war, and ahead of a meeting this week by club OPEC that is expected to result in a supply cut.

U.S. Intermediate (WTI) crude futures were at $53.78 per barrel at 0300 GMT, up $2.85 per barrel, or 5.6 percent from their last close.

U.S. crude prices were further supported by an announcement from that province would cut output to deal with a pipeline bottleneck that has led to crude building up in storage. Most of Alberta's is exported to the

International Brent futures were up $2.86 per barrel, or 4.8 percent, at $62.32 a barrel.

and the agreed during a weekend meeting in of the Group of 20 (G20) leading economies not to impose additional trade tariffs for at least 90 days while the pair hold talks to resolve existing disputes.

The trade war between the world's two biggest economies has weighed heavily on global trade, sparking concerns of an economic slowdown.

has not been included in the list of hundreds of products each side has slapped with import tariffs, but traders said the positive sentiment of the truce was also driving crude markets.

"The agreement to keep talking for 90 days during which tariffs are paused is an upside surprise," U.S. said in a note to clients on Monday. It added, though, that trade negotiations would be "bumpy".

Overall, said it saw a "slight upside in our 2019 growth outlook" because of the renewed talks.

Looking ahead, will eye a meeting by the Organization of the Petroleum Exporting Countries (OPEC) on Dec. 6. At the meeting, the group, along with non-OPEC member Russia, is expected to announce cuts aimed at reining in a production overhang that has pulled down crude prices by around a third since October.

No official announcements regarding supply cuts have yet been made, but most analysts expect a reduction of 1 million-1.4 million barrels per day (bpd) versus October levels, which were the highest by OPEC as a group since December 2016.

"Expectations are for coordinated cuts to reduce an oversupplied market and to realign with slower growth in demand," said in a note on Monday.

Meanwhile, in the United States continue to churn out record amounts of oil, with crude output at an unprecedented level of more than 11.5 million bpd.

With drilling activity still high, most analysts expect U.S. to rise further in 2019.

(Reporting by Gloystein; Editing by and Tom Hogue)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, December 03 2018. 09:00 IST