NEW YORK (Reuters) – Oil prices jumped nearly four percent on Monday after the United States and China agreed to a 90-day truce in a trade dispute and Canada’s Alberta province ordered a production cut, while exporter group OPEC looked set to reduce supply.
Brent crude futures rose $2.23 to settle at $61.69 a barrel, a 3.75 percent gain. U.S. West Texas Intermediate (WTI) crude futures gained $2.02 to settle at $52.95 a barrel, a 3.97 percent increase.
Both benchmarks surged more than 5 percent earlier in the session.
China and the United States agreed during a weekend meeting in Argentina of the Group of 20 leading economies not to impose additional trade tariffs for at least 90 days while they hold talks to resolve existing disputes.
The trade war between the world’s two biggest economies has weighed heavily on global trade and sparked concerns of an economic slowdown.
Crude oil has not been included in the list of products facing import tariffs, but traders said the positive sentiment was supporting crude markets.
“Initial signs of the U.S.-China trade relation on the mend have provided a boost to oil prices in today’s trading session. Nevertheless, whether the momentum will sustain hinges on tangible outcomes from the negotiations,” said Abhishek Kumar, senior energy analyst at Interfax Energy in London.
Oil also received support from an announcement by Alberta that the Western Canadian province will force producers to cut output by 8.7 percent, or 325,000 barrels per day (bpd), to deal with a pipeline bottleneck that has led to crude building up in storage.
The Organization of the Petroleum Exporting Countries meets on Thursday to decide output. The group, along with non-OPEC member Russia, is expected to announce cuts aimed at reining in a glut that has pulled down crude prices by around a third since October.
“We feel that a decline of about 1.1-1.2 million barrels per day will be required if fresh price lows are to be precluded,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
— Read on www.reuters.com/article/us-global-oil/oil-surges-almost-4-percent-on-trade-truce-expected-supply-cuts-idUSKBN1O201K