Oil prices surge as US-China trade deal nears

Daniel Fowler
January 14, 2020

Brent futures for March settlement were 64 cents lower at $64.34 a barrel on the ICE Futures Europe Exchange after losing 5.3pc last week.

Oil prices on Tuesday morning surged by 0.67 percent after four consecutive days of decline in the worldwide market due to relative calm in the Middle East as global trade players keep eye on United States and China as both countries prepare to sign a "phase one" trade deal this week.

The performance of heating oil has been quite poor in this winter due to lackluster demand, according to Robert Yawger, director of energy futures at Mizuho Securities USA LLC and John Kilduff, partner at Again Capital LLC.

Tom Kloza, global head of energy analysis at the Oil Price Information Service, noted that "It's hard for crude oil to go higher if refiners continue to lose money or at best break even on gasoline".

Oil prices rose slightly on Tuesday amid optimism about a U.S. "The heating oil crack is just getting killed", said Robert Yawger, director of energy futures at Mizuho in NY, adding lackluster demand for the product has weighed on crude prices. In the Asian session, US crude slipped below the 58.00 level, before recovering.

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Saudi Arabia's Energy Minister Abdulaziz bin Salman said in a Bloomberg television interview on Monday that OPEC and its allies remain focused on using production cuts to reduce oil inventories to normal levels, undeterred by the flare up in geopolitical tensions.

Global benchmark Brent touched a near four-month high above Dollars 70 before ending last week below USD 65, although the situation in the Middle East remains tense. "There's been an abject lack of heating oil demand", Kilduff said.

"As geopolitical tensions take a back seat for now, we may see more of the same in the short term", Tchilinguirian told the Reuters Global Oil Forum.

Crude oil futures slipped 0.75 percent to Rs 4,101 per barrel on January 14, as participants trimmed their positions ahead of the signing of the so-called Phase One of the US-China trade deal, which will be vital to gauging the direction of the market.

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