Oil held under $53 a barrel as a tentative deal to avoid another growth-killing U.S. government shutdown was offset by the prospect of rising American crude inventories.
Futures in New York clawed back most of a 0.6 percent drop on Monday that sent them to a two-week low. Congressional negotiators said Monday night in Washington they had reached a deal in principle on border security to avoid closure of the federal government. U.S. crude stockpiles are projected to rise for a fourth week, the longest such run since November, according to a Bloomberg survey before data due Wednesday.
Crude’s rally has fizzled in February as concern the U.S. and China won’t be able to defuse their trade war damps the demand outlook, while a strengthening dollar reduces the appeal of commodities priced in the currency. That’s blunted the potential for output reductions by the Organization of Petroleum Exporting Countries and its allies, as well as sanctions against Venezuela and Iran, to push prices higher.
“The noise from the U.S.-China trade dispute is blocking oil’s upper end,” said Hong Sungki, a commodities trader at NH Investment & Securities Co. in Seoul. “The current market has lost its direction and, as we go forward, progress on the trade spat will be the main factor providing fresh direction.”
West Texas Intermediate crude for March delivery rose 28 cents to $52.69 a barrel on the New York Mercantile Exchange at 7:53 a.m. in London. The contract fell 31 cents on Monday to $52.41, the lowest close since Jan. 28.
Brent for April settlement added 36 cents to $61.87 a barrel on the London-based ICE Futures Europe exchange. It fell 1 percent to settle at $61.51 on Monday. The global crude benchmark traded at a $8.79 premium to WTI.
Senate Appropriations Chairman Richard Shelby said lawmakers agreed on all seven spending bills needed to keep government agencies open. The news spurred gains in Asian stocks on Tuesday as investors were worried another partial shutdown would be a drag on U.S. growth.
Meanwhile, U.S. and Chinese trade negotiators are meeting in Beijing this week to try and reach a deal before a March 1 deadline when higher American tariffs on Chinese imports take effect. President Donald Trump wants to meet Chinese President Xi Jinping “very soon,” White House adviser Kellyanne Conway said Monday on Fox News, an optimistic sign for investors who are becoming increasingly concerned there won’t be an agreement.
U.S. inventories rose by 2.4 million barrels in the week through Feb. 8, according to the Bloomberg survey before the Energy Information Administration data. Record U.S. production will add further to the country’s stockpiles that are already above the five-year average of 432 million barrels.
–With assistance from Tsuyoshi Inajima.To contact the reporter on this story: Heesu Lee in Seoul at firstname.lastname@example.org To contact the editors responsible for this story: Pratish Narayanan at email@example.com Andrew Janes, Ovais Subhani