Oil soars near 5% as U.S. delays tariffs on some Chinese goods
* China vice premier holds talks with U.S. trade officials
* U.S. crude stocks forecast 2.8 mln bbls lower - Reuters
* U.S. crude oil stocks rise 3.7 mln bbls -API
* Saudi expected to prop up oil prices ahead of IPO -
(Adds API's U.S. crude oil inventory data)
By Scott DiSavino
NEW YORK, Aug 13 (Reuters) - Oil prices on Tuesday jumped by
the most so far this year after the United States said it would
delay imposing a 10% tariff on certain Chinese products, easing
concerns over a global trade war that has pummelled the market
in recent months.
The Chinese products include laptops and cellphones. The
tariffs had been scheduled to start next month.
"The U.S.-China trade war has caused energy demand growth to
take a big hit. Any glimmer of hope revives the prospects for a
more positive demand landscape," said John Kilduff, partner at
energy hedge fund Again Capital Management in New York.
Brent futures rose $2.73, or 4.7%, to settle at
$61.30 a barrel, while U.S. West Texas Intermediate (WTI) crude
gained $2.17, or 4.0%, to settle at $57.10.
That was the biggest daily percentage gain for Brent since
December when the contract gained] 7.9%.
Oil prices pared some of their gains in post-settlement
trade after data from industry group the American Petroleum
Institute (API) showed U.S. crude stocks unexpectedly rose last
Crude inventories climbed 3.7 million barrels to 443
million, compared with analysts' expectations for a decrease of
2.8 million barrels, the API said.
U.S. government data on crude stocks is due on Wednesday
Since falling to their lowest levels since January on Aug.
7, Brent has gained 9% and WTI 12%. That bigger gain in WTI over
the past four days briefly cut Brent's premium over WTI
<WTCLc1-LCOc1> to its lowest since March 2018.
The Chinese Ministry of Commerce said in a statement on
Tuesday that U.S. and Chinese trade officials spoke on the phone
and agreed to talk again within two weeks.
"The possibility that the United States and China can get
the trade talks on track ... is raising hopes that they might
actually get some type of deal," said Phil Flynn, analyst at
Price Futures Group in Chicago.
"That's why we are seeing this big rebound in prices," Flynn
Before the U.S. announcement about the tariff delay, Brent
futures were still trading about 20% below the 2019 high they
hit in April.
In addition to the cooling of the U.S.-China trade war,
analysts said prices were propped up by expectations U.S. crude
inventories declined last week and a belief Saudi Arabia will
stick with production cuts.
In the United States, analysts forecasts crude stockpiles
fell by 2.8 million barrels last week, according to a Reuters
"If we get the drawdown in (U.S.) inventory that most people
are looking for, that is going to get the market a lot tighter,"
said Flynn at Price Futures.
Saudi Arabia, the de facto leader of the Organization of the
Petroleum Exporting Countries (OPEC), last week said it planned
to keep its crude exports below 7 million barrels per day (bpd)
in August and September to help drain global oil inventories.
OPEC and its allies, known as OPEC+, have agreed to cut 1.2
million bpd of production since Jan. 1.
The kingdom's plan to float its national oil company Saudi
Aramco in what could be the world's largest initial public
offering (IPO) gives it further impetus to boost prices.
"Saudi Arabia and its Gulf allies standing firm on their
commitment to the OPEC+ output-cut agreement has supported
prices," said Abhishek Kumar, head of analytics at Interfax
Energy in London.
(Additional reporting by Ron Bousso in London, Roslan Khasawneh
in Singapore and Laila Kearney in New York; Editing by
Marguerita Choy and David Goodman)
First Published: 2019-08-13 03:23:00
Updated 2019-08-13 22:52:45
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