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Oil surges on U.S.-China trade war ceasefire, expected supply cuts

Reuters  |  SINGAPORE 

By Gloystein

(Reuters) - prices soared by more than 4 percent 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 $53.41 per barrel at 0739 GMT, up $2.48 per barrel, or 4.9 percent from their last close.

U.S. crude prices were further pushed up by an announcement from that province will force producers to cut output by 8.7 percent, or 325,000 barrels per day (bpd), to deal with a pipeline bottleneck that has led to crude building up in storage. Most of Alberta's is exported to the

Stephen Innes, head of trading for Asia/Pacific at in said Alberta's decision was "an unprecedented step to ease a crisis in the Canadian "

International Brent futures were up $2.66 per barrel, or 4.5 percent, at $62.12 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.

"Markets are expecting to see a substantial production cut after Russian said his country's cooperation on with would continue," said Hussein Sayed, at

Within OPEC, said on Monday it would leave the club in January.

Qatar's is only around 600,000 bpd, while it is the world's biggest exporter of liquefied (LNG).

The small country has also been at loggerheads with its much bigger neighbour and de facto OPEC

Outside OPEC, Russian stood at 11.37 million bpd in November, down from a post-Soviet record of 11.41 million bpd it reached in October, data showed on Sunday.

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. 13:17 IST