Oil prices gained nearly 1% on Thursday on hopes that the United States and China were close to reaching a deal on an ongoing trade dispute that has raised concerns about global demand for crude.
Brent crude futures rose 48 cents to settle at $64.20 a barrel. West Texas Intermediate (WTI) crude futures rose 42 cents to settle at $59.18 a barrel.
Trump tweeted on Thursday that the United States was very close to a big deal with China amid reports that the country was considering a delay or possible cancellation of tariffs scheduled to go into effect on Dec. 15.
While prices received a fresh boost immediately following the tweet, futures eased somewhat during the session.
“It’s tough to draw a firm conclusion from the latest that came out,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut. “It seems to be close, but we’ve all been waiting for this deal to happen.”
Later on Thursday, a source briefed on talks between the two nations said the United States has reached a “phase-one” trade deal in principle with China, adding that a statement from the White House was expected soon.
Trump was scheduled to huddle with his top trade advisers at 2:30 p.m. (1930 GMT) on Thursday. Ahead of the meeting, U.S. Trade Representative Robert Lighthizer told senators that announcements were possibly “imminent” on U.S. tariffs, Republican Senator John Cornyn told reporters.
The outlook for oil demand has been clouded by U.S.-China trade tensions and uncertainty over whether a fresh round of U.S. tariffs on Chinese goods would come into effect.
China’s commerce ministry said Beijing and Washington were in close communication, declining to comment on possible retaliatory steps if Trump imposes the extra tariffs.
Oil prices have firmed after OPEC and other producers including Russia agreed last week to rein in output by an extra 500,000 barrels per day in the first quarter of 2020.
The Organization of the Petroleum Exporting Countries said this week that it now expected a small oil market deficit in the next year, suggesting the market is tighter than previously thought.
By contrast, the International Energy Agency (IEA) predicted a sharp rise in global inventories despite the OPEC agreement, noting expectations for lower output by the United States and other non-OPEC countries.
Oil prices were also supported by the U.S. Federal Reserve keeping interest rates unchanged at a meeting on Wednesday.
The European Central Bank also kept its ultra-easy monetary policy unchanged on Thursday, even keeping the door open to more stimulus.
“While oil prices are trending higher benefiting from a dovish Fed, a weaker U.S. dollar, the IEA reiterates that despite the deeper oil production cuts, the oil market is likely to be oversupplied in 1H20,” said UBS oil analyst Giovanni Staunovo.