Oil prices climb to 2-month high on US, China trade agreement

President Donald Trump said the US had a trade deal with China, feeding hopes for the outlook for energy demand in the world’s two largest economies

- 

Oil prices rose 2% on Wednesday, to their highest in more than two months, as President Donald Trump said the US had a trade deal with China, feeding hopes for the outlook for energy demand in the world’s two largest economies.

Brent crude futures rose $1.32, or 1.97%, to $68.19 a barrel at 11:35 a.m. EDT (1535 GMT). US West Texas Intermediate crude was up $1.51, or 2.32%, to $66.49. Both Brent and WTI reached their highest in more than two months.

Trump said Beijing would supply magnets and rare earth minerals and the US will allow Chinese students in its colleges and universities. Trump added the deal is subject to final approval by him and President Xi Jinping.

The trade-related downside risk in oil has been temporarily removed, although the market reaction has been tepid as it is not clear how economic growth and global oil demand will be affected, PVM analyst Tamas Varga said.

Trump said he was less confident that Iran would agree to stop uranium enrichment in a nuclear deal with Washington, according to an interview released on Wednesday.

In the US, crude inventories fell by 3.6 million barrels to 432.4 million barrels last week, the Energy Information Administration said on Wednesday. Analysts polled by Reuters had expected a draw of 2 million barrels.

"It's a bullish report,” said Bob Yawger, director of energy futures at Mizuho, adding that the demand for motor gasoline began to strengthen.