Futures Movers: U.S. oil price jumps to near 3-month peak as China-U.S. trade fear fades

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Oil futures jumped more than 1%, hitting a three-month high intraday Friday as progress toward a partial U.S.-China trade deal reignited hope that a major headwind to crude demand was receding.

President Donald Trump approved a phase-one trade deal with China, according to reports, possibly averting new tariffs on some $160 billion in consumer goods that were set to take effect Sunday, and bolstering hope that the harm done to global economic growth may fade.

West Texas Intermediate crude for January delivery CLF20, +1.06% rose 65 cents, or 1.1%, to $59.82 a barrel and touched an intraday peak at $60 on the New York Mercantile Exchange, which would mark its highest level since mid September, according to FactSet data.

February Brent crude BRNG20, +1.36% gained 93 cents, or 1.4%, to trade at $65.09 a barrel on ICE Futures Europe, which would also mark its highest trade in about three months.

Trump agreed to a limited trade agreement with China that will see the U.S. slash existing tariffs on $360 billion of goods, according to the Wall Street Journal. Reports also indicate that Beijing will ramp up purchases of agricultural goods and other goods to $50 billion in 2020, with additional concessions on intellectual property protection or financial services.

However, China has said the partial trade agreement has yet to be completed despite President Trump’s signoff, the Journal reported.

Still, if cemented, a tariff pact would help to reduce one of the biggest points of friction to oil prices because trade tensions between the global superpowers slowed global economic growth and hence demand for oil and its byproducts, market experts agree.

On top of trade, a decisive victory for Boris Johnson’s U.K. Conservative Party in Thursday’s elections may remove another element of concern for assets considered risky like oil and stocks.

“West Texas Intermediate crude’s price barrier that is the $60 a barrel seems poised to break,” said Edward Moya, senior market analyst at brokerage Oanda. “From a macro-economic perspective oil prices could rip higher after both trade and Brexit uncertainty have been alleviated in the short-term,” he said.

Prices for crude have been mostly drifting higher after central banks signaled a willingness to keep interest rates low and maintain economic stimulus for the foreseeable future which may help to boost the global economy and buoy crude demand. An agreement to further cut global production between members of the Organization of the Petroleum Exporting Countries and its allies in Vienna last week has also helped to support energy futures, despite signs of growing oil inventories.