Oil futures rose Tuesday, with positive expectations around U.S.-China trade talks and a move further into record territory by U.S. stocks helping to lift global and U.S. benchmark crude prices to their highest settlements in six weeks.
January Brent crude BRNF20, +0.00%, the global benchmark, gained 83 cents, or 1.3%, to settle at $62.96 a barrel on ICE Futures Europe. West Texas Intermediate crude for December delivery CLZ19, +1.13% rose 69 cents, or 1.2%, to settle $57.23 a barrel on the New York Mercantile Exchange.
Both front-month WTI and Brent contracts posted their highest finish since Sept. 24, according to Dow Jones Market Data.
WTI futures prices gained “on optimism over China/U.S. trade talks, and a certain degree of correlation to all-time highs in U.S. equities,” said Robert Yawger, director for energy at Mizuho Securities U.S.A., in a note.
U.S. benchmark stock indexes were trading higher Tuesday as oil futures settled, with major U.S. equity indexes — the Dow Jones Industrial Average DJIA, +0.23% and the Nasdaq Composite COMP, +0.14% — looking to notch another record finish.
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Reports the U.S. might roll back tariffs on $112 billion worth of Chinese imports as a concession to seal a “phase one” trade deal was credited with buoying sentiment across markets.
“All-time highs in U.S. equities imply a certain degree of positive demand construction,” Yawger said.
In addition, the Organization of the Petroleum Exporting Countries on Tuesday said it expects oil supplies to fall continuously over the next five years, indicating the cartel might need to further cut output to stabilize prices on the back of a U.S. production boom and sluggish oil demand. OPEC and its allies are set to debate whether to continue current production cuts of 1.2 million barrels a day or deepen the reductions when they meet in early December.
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Oil traders also waited for the latest weekly figures on U.S. petroleum supplies, with trade group the American Petroleum Institute scheduled to release its figures late Tuesday. Data from the Energy Information Administration will be issued early Wednesday.
Analysts, on average, expect the EIA to report an increase of 2.7 million barrels in crude stocks for the week ended Nov. 1, according to poll conducted by S&P Global Platts. The poll also showed forecasts for supply declines of 2.4 million barrels for gasoline and 1 million barrels for distillates, which include heating oil.
On Nymex tuesday, December gasoline RBZ19, +0.64% rose 0.7% to $1.6746 a gallon, while December heating oil HOZ19, +0.78% added 0.8% to $1.9566 a gallon.
December natural-gas futures NGZ19, +1.81% tacked on 1.5% to $2.862 per million British thermal units. Prices for the front-month contract marked a second straight settlement at their highest since March as forecasts for winter weather in the Eastern U.S. raised demand expectations for the fuel.
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