Oil rose further above $62 a barrel on Tuesday, supported by hopes that U.S. President Donald Trump may signal progress on trade talks with China and lower inventories at a U.S. oil hub.
Concern about slower economic growth and oil demand from the fallout of the 16-month U.S.-China trade dispute sent prices lower on Monday. Trump gives a speech later on Tuesday and investors are keen for an update on the talks.
Brent crude, the global benchmark, was up 30 cents at $62.48 a barrel by 0939 GMT, after earlier falling as low as $61.90. U.S. West Texas Intermediate (WTI) crude was up 19 cents at $57.05.
“The oil market is in a holding pattern,” said Tamas Varga of oil broker PVM. “The next $5-$10 move will be decided by economic and trade considerations.”
“He is widely expected to delay his decision to impose tariffs on European car and auto part imports and will also shed further light on the status of the trade negotiations with China,” Varga added, referring to Trump’s speech.
The U.S. president said on Saturday talks with China were moving along “very nicely” but the United States would only make a deal if it was the right one. He also there had been incorrect reporting about U.S. willingness to lift tariffs.
Adding further support, U.S. data showed that crude inventories at Cushing, the delivery point for WTI, fell about 1.2 million barrels in the week to Nov. 8, traders said, citing market intelligence firm Genscape.
Cushing inventories had grown for five weeks in a row through Nov. 1, according to government data.
Brent has risen 16% in 2019, supported by a supply-limiting pact by the Organization of the Petroleum Exporting Countries and allies, including Russia. The producers meet on Dec. 5-6 to decide whether to extend the deal.
Oman, one of the outside producers working with OPEC, said on Monday that the alliance will probably extend the agreement but are unlikely to increase the size of the supply cut.
In a further supportive supply-side development, Goldman Sachs also cut its 2020 forecast for growth in U.S. oil production, which has surged in recent years and helped keep a lid on prices.
The bank cut its growth forecast for next year by 100,000 barrels per day (bpd) to 600,000 bpd over 2019.