TOKYO- Oil was marginally lower on Monday but did not stray far from its latest three-month peak. Upbeat activity was brought by positive headlines on United States and China’s possibility of signing the trade pact soon as US President Donald Trump said that the pact would be signed “very shortly”.
Brent crude oil declined 15 cents, equivalent to 0.2% at $65.99 per barrel by 0306 GMT. West Intermediate CLc1 also swiped out 15 cents at $60.29 per barrel.
“Phase one” trade deal was introduced earlier part of December as a way to end months-long trade truce between China and the United States, which harmed markets and dragged the world economy to a slowdown.
The United States decided to cut some imposed tariffs on Chinese goods in exchange for a larger purchase of American agricultural products by Chinese importers, as stated in a deal that is bound to get signed in January.
“We just achieved a breakthrough on the trade deal and we will be signing it very shortly,” Trump said on Saturday.
Increased optimism and upbeat market sentiment has boosted business confidence as it also supported economic growth and energy demand forecast.
“Oil prices will continue to benefit from the positive developments in the U.S.-China trade,” said Stephen Innes, chief Asia market strategist at AxiTrader.
“With a more constructive global macro outlook than at any time in the last year, oil is well-supported by both fundamental factors and sentiment now,” he added.
In line, US oil drillers were expecting price hike as last week recorded the most number of oil rigs produced in a week since February 2018.
Drillers added an additional 18 oil rigs making it a total of 685, the highest recorded number since November, according to weekly report of Baker Hughes.
US economic growth edged higher in third quarter according to recent data as the economy shows signs of stability enforced by strong labor market.
Trading activity retreated as many investors are spending their holiday already, potentially accentuating market status due to absence of liquidity.
“With the holiday season upon us with much-reduced volumes and liquidity, some choppy daily moves can … be expected,” said Jeffrey Halley, senior market analyst at OANDA.