Crude Oil Futures Gain on Trade Hopes

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange mostly moved higher in afternoon trade Thursday, spurred by earlier reports United States and China agreed to lift existing tariffs on each other's imports in tranches that added to an improving outlook for global economic growth and drove an appetite for risk-on trade, although both crude contracts settled well off intraday highs.

NYMEX December West Texas Intermediate futures ended up $0.80 at $57.15 per barrel (bbl), paring an advance to a $57.88 fresh six-week high on the spot continuous chart, with ICE January Brent settling $0.55 higher at $62.29 per bbl amid inside trade. NYMEX December RBOB ended the session 0.93 cent higher at $1.6355 per bbl settlement, bouncing off a four-day low at $1.6204 gallon.

The exception Thursday was the NYMEX December ULSD contract that eased 0.75 cent lower to a $1.9203-per-gallon one-week-low spot settlement, with weakness underpinned by Wednesday's reported modest 600,000 bbl drawdown in U.S. distillate stocks during the week of Nov. 1. Adding to the smaller-than-expected draw, distillate imports jumped 93.7% to a 306,000-barrel-per-day (bpd) better-than-eight-month high, while exports fell for the second straight week to the third lowest rate of the year.

Crude contracts drifted higher in afternoon trade Thursday, gaining on news the United States and China agreed on a plan for the gradual removal of imports levies -- a major breakthrough in the 19-month-long bilateral trade negotiations.

The market continues to be driven by sentiment around the long-awaited trade agreement, with the latest headlines helping to push equities and the oil complex higher on the session.

U.S. stock indexes soared to fresh record highs the second time this week, as Dow Jones Industrial ended the session up 182 points to 27,674 and S&P 500 gained 0.3%.

The U.S. dollar, which has an inverse relationship with U.S. crude oil, reached a three-week high in index trading, with the December index settling at 97.989. The dollar rallied as the 10-year Treasury yield jumped to a three-year high, erasing a recessionary signal when the 10-year note was at a discount to short-term bonds.

Contracts were also pushed higher by reports Saudi Arabia is seeking higher quota compliance from Nigeria and Iraq ahead of OPEC's policy meeting in Vienna next month and a planned Aramco's IPO. Saudi Aramco this week officially unveiled its plan for an IPO on Saudi stock market beginning Dec. 11. A week earlier, the 13-member producer group is set to meet with a Russia-led coalition of 10 nations in Vienna.

Liubov Georges can be reached at liubov.georges@dtn.com

(CZ)