Oil inches higher as investors await pivotal trade, OPEC+ talks

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Alex Nussbaum and Rakteem Katakey, Bloomberg
Published

2:34 pm CDT, Thursday, June 27, 2019

FILE – In this Oct. 22, 2015 file photo, workers tend to oil pump jacks behind a natural gas flare near Watford City, N.D. 
FILE – In this Oct. 22, 2015 file photo, workers tend to oil pump jacks behind a natural gas flare near Watford City, N.D. 

Photo: Eric Gay, Associated Press

Photo: Eric Gay, Associated Press

FILE – In this Oct. 22, 2015 file photo, workers tend to oil pump jacks behind a natural gas flare near Watford City, N.D. 
FILE – In this Oct. 22, 2015 file photo, workers tend to oil pump jacks behind a natural gas flare near Watford City, N.D. 

Photo: Eric Gay, Associated Press

Oil inches higher as investors await pivotal trade, OPEC+ talks

Oil closed Thursday in a holding pattern as traders awaited gatherings that could be decisive for the U.S.-China trade feud and the OPEC+ coalition’s commitment to supply curbs.

Futures edged up 0.1% in New York, with the outcome of both parleys uncertain. U.S. President Donald Trump, in fact, threatened more levies on China if there’s no progress at his meeting with Chinese leader Xi Jinping on the sidelines of the G-20 summit on Saturday.

U.S. crude was nonetheless poised for its best monthly performance since January, having gained 11% thus far in June. For the second quarter, prices are surprisingly close to where they started in April, after three months in which Trump stiffened sanctions against Iran and Venezuela, explosions struck Persian Gulf tankers and trade talks collapsed.

Next week, the Organization of Petroleum Exporting Countries and partners are due to meet in Vienna to decide on production levels.

PREVIOUSLY: Oil reaches 5-week high on biggest drop in stockpiles since 2016

“The uncertainty ahead of this weekend’s G-20 and next week’s OPEC meetings are likely to keep the upside capped for now,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen. “Failure at the weekend would see the market focus return to global growth and demand worries.”

West Texas Intermediate for August delivery rose 5 cents to $59.43 a barrel on the New York Mercantile Exchange, its highest closing price since May 22.

Brent for August settlement was 6 cents higher at $66.55 on London’s ICE Futures Europe Exchange. The global benchmark crude traded at a premium of $7.10 to WTI.

Gasoline futures fell 1.2% as it became clear suppliers from the U.S. Gulf Coast and Europe would be able to fill the gap for the closure of the biggest refinery on the U.S. East Coast.

Trump will meet with Xi on Saturday in Osaka, according to the White House. “My Plan B with China is to take in billions and billions of dollars a month and we’ll do less and less business with them,” Trump said Wednesday in an interview with Fox Business Network. The American president has previously said he may raise tariffs on the remaining $300 billion of Chinese imports.

A trade deal would boost the demand outlook and take oil prices higher, said Frances Hudson, a global strategist at Aberdeen Standard Investments in Edinburgh. But the move could be temporary, given other signs of a slowing economy and the overhang of increasing U.S. production, she said.

“There’s plenty of volatility in this market,” Hudson said. “I don’t think anybody could have any confidence that trade is suddenly going to resume, be smooth and feed into higher growth going forward.”

–With assistance from Sharon Cho.

©2019 Bloomberg L.P.

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