Saudi Arabia’s aggressive plan from a day ago to deepen production cuts in March also played into Wednesday’s crude markets, sending New York-traded West Texas Intermediate and London’s Brent up more than 2% each to extend Tuesday’s gains of more than 1%.
was up 92 cents, or 1.7%, at 54.02 per barrel by 1:27 PM ET (18:27 GMT).
, the global oil benchmark, rose $1.10, or 1.8%, to $63.52.
Oil prices rose as traders awaited developments on negotiations in China led by U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer amid optimism that the world’s biggest economies were close to ending their bitter trade acrimony. Risk assets have been volatile in recent days, reacting to Trump’s decision at first to forego a summit with Chinese President Xi Jinping, then express his continued desire to strike a deal with China.
Mnuchin said on Wednesday the talks were going well. Trump has no made no secret of how much he wants an agreement with Beijing, with Forbes reporting he might be ready to let slide the March 1 deadline he had for a deal, before China faces additional tariffs on $200 billion worth of goods it exports to the U.S.
The distraction over China helped oil bulls maintain their hold on Wednesday’s oil market despite the Energy Information Administration saying in its weekly report that U.S. rose by 3.633 million barrels in the week ended Feb. 8, versus an expected build of 2.668 million.
Crude supplies at Cushing, Okla, the key delivery point for WTI, decreased by 1.02 million barrels, the EIA said. But total U.S. crude oil inventories stood at 450.8 million barrels, which the EIA considered to be “about 6% above the five-year average for this time of year”.
rose by 408,000 barrels, compared to an expected build of 826,000 million. rose by 1.19 million barrels, compared to forecasts for a decline of 1.14 million.
John Kilduff, founding partner at New York energy hedge fund Again Capital, described the report as “unique” in the sense that the crude build came despite a plunge in imports that were further offset by a slump in refinery utilization.
“It all makes for a bearish report,” Kilduff said.
Gene McGillian, director of market research at Tradition Energy in Stamford, Conn., agreed.
“The market’s up almost entirely on the notion that we’ll get the China deal and all will be all good for oil after that,” McGillian said. “We don’t know that for sure, but the EIA numbers we have before us are real proof as to what supply-demand is now.”
Saudi Energy Minister Khalid al-Falih said in an interview with the Financial Times this week that the kingdom will pump just 9.8 million barrels per day in March. That will be more than 500,000 bpd below the production Riyadh agreed to in December with the enlarged OPEC+10 group, including Russia, to lift crude prices.