Oil prices rose on Wednesday, tracking gains in stock markets. Investors are pinning their hopes on a possible Brexit deal and on signals from OPEC and its allies that further supply constraints could be close.
Brent crude oil prices rose 21 cents to 58.95 dollars, up about 0.3% from the previous day’s close. US West Texas Intermediate crude gained 16 cents, or 0.3 percent, to $52.97 a barrel.
“Oil is starting to see some bullish positions added on the easing of two big tail risks for global demand, the U.S.-China trade war and Brexit”, analysts said. “While a broader trade deal seems unlikely in the immediate future, the risks for the U.S.-China trade war have been fading.”
Recent talks between te UK and the EU for a Brexit deal before the summit this week have continued until midnight until Wednesday, and it is unclear whether Britain can avoid delaying its October 31 departure.
Analysts said any deal that avoided the difficult situation or disagreement on Brexit should boost economic growth following oil and price growth.
OPEC Secretary-General Mohammed Barkindo said the Organization of Petroleum Exporting Countries would do all it could along with its allied producers to keep the oil market stable beyond 2020.
OPEC, Russia and other producers have cut oil production by 1,200,000 bpd to support the market. However, the expected rise in US crude oil inventories this week kept prices under pressure. US crude oil is likely to have grown for a fifth straight week, a preliminary Reuters poll showed.
US oil inventory reports from the American Petroleum Institute’s Industrial Group are due to be released on Wednesday and the US Energy Information Administration on Thursday. Reporting was delayed by one day because of a US government failure.
Concerns about the global economic slowdown due to the prolonged trade war between the United States and China and the swelling of US stockpiles have put pressure on prices. The International Monetary Fund warned on Tuesday that the trade war between the United States and China will reduce global growth to a slower pace than the financial crisis between 2008-2009.