Oil prices rose on Tuesday on hopes for a US-China trade agreement and optimism that Washington could roll back some of the tariffs it has imposed on Chinese imports.
Brent crude was up 67 cents, or 1.1%, at $62.80 a barrel by 1435 GMT. US crude rose 58 cents, or 1%, to $57.12.
China is pushing US President Donald Trump to remove more tariffs imposed in September as part of a so-called Phase 1 deal, which would help to ease the broad economic damage inflicted by the trade dispute between the world’s two biggest oil consumers.
“If some of the existing tariffs were to be dismantled, that should restore some measure of global demand for oil as economic and trade conditions recover,” said Han Tan, market analyst at FXTM.
OPEC Secretary-General Mohammad Barkindo said the oil market outlook for 2020 may be brighter than previously forecast, appearing to downplay any need for deeper production cuts.
“Based on the preliminary numbers, 2020 looks like it will have upside potential,” Barkindo told a briefing.
The Organization of the Petroleum Exporting Countries (OPEC) also said it would supply a diminishing amount of oil in the next five years as output increases from US shale deposits and elsewhere.
OPEC’s production of crude oil and other liquids is expected to decline to 32.8 million barrels per day (bpd) by 2024, the group said in its 2019 World Oil Outlook.
Investors are also awaiting US inventory data due later on Tuesday.
U.S. crude oil inventories were forecast to have risen last week, while refined products stocks are likely to have declined, a preliminary Reuters poll showed on Monday.
The U.S. Federal Reserve’s interest rate cut last week, recent weakness in the dollar and improved U.S. jobs growth in October also provided support, analysts said.
“We believe that the strength in oil prices will be short-lived, given the scale of the surplus that is expected over the 1H20,” ING analyst Warren Patterson said, referring to the first half of 2020.
“The risk to this view is if OPEC+ surprises the market in December by announcing even deeper than expected cuts for 2020.” OPEC, Russia and other producers, a group known as OPEC+, have implemented a deal to cut oil output by 1.2 million barrels per day from the start of this year.
Iranian Oil Minister Bijan Zanganeh on Monday said he expects further production cuts to be agreed at the next meeting of the group in December.