Investing.com – Oil bulls are waiting for the next big thing, either a breakthrough in U.S.-Sino trade talks or another impactful number on Saudi production cuts, to take the market higher.
Until then, the game appears to be to sit tight on this week’s gain of nearly 9% — the most for a week since April 2018 — and shut out any “market noise” that could spark a substantive correction.
New York-traded was down 12 cents, or 0.2%, at $52.24 per barrel by 12:20 PM ET (17:20 GMT) on Thursday, after making a new 2019 high at $52.70.
London-traded, the global oil benchmark, slid by 8 cents, or 0.1%, to $61.36, after rising to $61.91 earlier, the highest so far for this year.
A drop in Wall Street shares after a four-day rally also weighed on oil.
Just two weeks ago, oil was in a bear market, with WTI down 40% on Christmas Eve from four-year highs hit in early October. U.S. crude futures have gained more than 23%, re-establishing a bull market, in a remarkable turnaround spurred by Saudi production cuts and optimism over trade talks ongoing in Beijing between U.S. and Chinese delegations.
Wednesday’s trading alone brought a 5% gain after Saudi Enery Minister Khalid al-Falih, vowing to rebalance the market, said the kingdom was pumping approximately 800,000 barrels fewer a day from a record high of 10.2 millin barrels per day in November. The amount Riyadh would ship overseas in February would be another 100,000 bpd fewer than January’s 7.2 million bpd, he added.
Falih’s remarks, along with positive news on a huge Saudi bond issue and listing plans for the kingdom’s state oil company, helped bulls seized the narrative away from a particularly bearish weekly dataset released by the U.S. Energy Information Administration.
fell by 1.68 million barrels for the week ended Jan 4, about a third less than the 2.4 million-barrel draw forecast by analysts, the EIA said. On the products side, rose by 8.07 million barrels, more than double the expected build of 3.39 million barrels. , which include diesel and , increased by 10.61 million barrels, compared to forecasts for a gain of 1.89 million.
In Thursday’s session, optimism over the trade talks in Beijing was wearing off despite the discussions extending to a third day, Reuters reported. Another meeting between U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He is expected later this month and the two countries have until March 1 to make good on a deal before the deadline that could possible bring additional tariffs on $200 billion worth of Chinese goods. China is also the world’s biggest oil consumer, so any untoward happening in its economy will have major implications on global oil demand.
“The oil rally is kind of stalling today after a near uninterrupted run since the start of the year,” said Gene McGillian, director of energy research at Tradition Energy in Stamford, Conn. “But the bulls are trying to keep it together and waiting for the next big driver to emerge.”
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Source: Investing.com
