Oil prices rose on Tuesday on hopes of progress toward a trade agreement between the United States and China.
China’s Commerce Ministry said that U.S. and Chinese trade negotiators held a phone call on Tuesday morning as the two sides tried out a preliminary “phase one” deal in a trade war that has dragged on for 16 months.
The call took place amid heightened tensions between Beijing and Washington, with China saying it had summoned the U.S. ambassador on Monday to protest against the passage in the U.S. Congress of the Hong Kong Human Rights and Democracy Act.
“Oil traders remain hopeful a trade deal will get signed,” said Stephen Innes, chief Asia market strategist at AxiTrader.
Brent crude LCOc1, the international benchmark for oil prices, was up 20 cents at $63.85 at 0958 GMT. West Texas Intermediate crude CLc1 rose 19 cents to $58.20.
On the supply side, the Organization of the Petroleum Exporting Countries (OPEC) meets on December 5 in Vienna, followed by talks with other oil producers, including Russia, that have agreed to cut output to support prices, a group known as OPEC+.
“The current consensus is that the OPEC+ supply agreement will be rolled over for at least three months at the group’s next meeting with special emphasis on stricter compliance,”
“It would help a great deal to balance global oil inventories next year. This prevents oil prices from falling,” Tamas Varga of oil brokerage PVM said.
Analysts at J.P. Morgan also expect that OPEC+ may extend the output cuts until the end of 2020, the bank said in a note.
In the United States, crude oil stockpiles are expected to have declined by 300,000 barrels last week, according to a Reuters poll of analysts.
The poll was conducted ahead of reports from the American Petroleum Institute (API), an industry group, and the Energy Information Administration (EIA).
“Confirmation of a stock draw from the API today and the EIA tomorrow could offer some immediate support to the market, with the last stock drawdown seen in mid-October,” ING analyst Warren Patterson said.
The API is scheduled to release its data for the latest week at 4:30 p.m. EST (2130 GMT) on Tuesday, and the weekly EIA report is due at 10:30 a.m. on Wednesday.