U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching higher on Monday just slightly below their three month highs reached on Friday. The markets continue to receive support from Friday’s announcement of an initial trade deal between the United States and China although some analysts are expressing concerns over the lack of details.
At 10:52 GMT, February WTI crude oil is trading $59.90, down $0.08 or -0.15%. February Brent crude oil is at $65.12, down $0.10 or -0.17%.
Data from China on Monday showing industrial output and retail sales growth accelerating more than expected in November offered some support for oil prices.
Investors Hoping Trade Deal Leads to Stronger Demand Growth
U.S. and Chinese officials announced on Friday that the two economic powerhouses had reached a phase one agreement after a combative 18-month trade war.
U.S. Trade Representative Robert Lighthizer said on Sunday that the phase one U.S.-China trade deal reached on Friday is “totally done,” and it will nearly double U.S. exports to China over the next two years.
The reaction in the markets to the news has been mixed with many analysts advising caution. Some critics noted several shortcomings in the trade deal that was announced between the world’s two largest economies on Friday.
Solid China Factory, Retail Reports Point toward Higher Demand
Growth in China’s industrial and retail sectors beat expectations in November, as government support propped up demand in the world’s second-largest economy and amid easing trade hostilities with Washington.
Other News
Amid rising U.S. oil output, energy firms added rigs for the first time in eight weeks, although total U.S. oil rig count remains on track to fall for the first year since 2016.
Daily Forecast
The late price behavior on Friday and early Monday suggests crude oil traders have fully priced in the Phase One trade agreement. This means that investors will be looking for further news to push prices through the important technical resistance levels in order to extend the rally.
With the OPEC production cut meeting also out of the way, the main market driver this week is likely to be Tuesday’s American Petroleum Institute (API) and Wednesday’s U.S. Energy Information Administration (EIA) weekly inventories reports.
Crude oil traders are also likely to react to today’s U.S. Flash Manufacturing PMI report, due to be released at 13:30 GMT. It’s expected to come in at 52.6. A stronger number will be bullish for prices. A weak number is likely to encourage investors to sell because it will indicate slower demand growth.