Hopes of US stock draw, thawing trade tensions lift Brent
The front-month ICE Brent contract has gained by $1.26/ bbl on the day, to trade at $62.39/bbl at 09.00 GMT.
IMAGE: Getty Images
Upward pressure:
The American Petroleum Institute (API) has estimated a 2.98 million-bbl draw in US crude stocks over the past week, which could mark the first decline, after two consecutive weeks of builds. The official US Energy Information Administration (EIA) data is expected later today.
Trump has said he expects to reach a “great deal” with China when he meets President Xi Jinping later this month, according to CNBC. “It’s going to be a great trade deal. It’s going to be fantastic for both countries, and it’s going to be fantastic for the entire world,” CNBC quoted him as saying.
“Trump’s trade negotiation comments are likely providing some support to the market,” ING’s head of commodity strategy, Warren Patterson said.
“Further support is likely coming from the cancellation of the Trump-Putin summit, which erodes hopes for a Russia-Ukraine peace deal,” Patterson added.
Downward pressure:
On the flip side, lingering concerns of an oversupplied market could temper optimism.
A US licensing update has allowed Venezuela to resume crude exports to the US “following a five-month pause,” commodities research firm Energy Aspects said. Reuters reported in August that Chevron had been granted a “restricted license” by the US Treasury Department to operate in Venezuela.
“The prompt Brent discount to the six-month contract has widened sharply, reflecting a growing belief that OPEC+ output increases and rising non-OPEC supply will keep the market well stocked through the winter,” Ole Hanson, head of commodity strategy at Saxo Bank said.
“With Brent stuck below USD 65, speculative sentiment remains fragile. Managed money accounts have been reducing long exposure in recent weeks while adding to gross shorts, betting on further downside as inventories build and the curve softens,” Hanson added.
By Konica Bhatt
Please get in touch with comments or additional info to news@engine.online
