Analysts on Tuesday said that oil prices edged higher as investors focused on the signing of a preliminary trade deal between the United States and China, the world top oil consumers, and on expectations of a drawdown in U.S. crude oil inventories.
They argued that price gains were capped by receding Middle East tensions, with both Tehran and Washington desisting from any further escalation after this month’s clashes.
Brent crude was up 16 cents, or 0.3 per cent, at $64.36 per barrel after falling 1% on Monday. U.S. West Texas Intermediate crude futures were up 13 cents, or 0.2 per cent, at $58.21 a barrel.
“Oil prices are modestly rebounding, following four days of intense selling,” said Edward Moya, the analyst at brokerage OANDA, pointing to trade-deal optimism and fading concerns over the U.S.-Iran conflict.
Daily Times gathered that, oil prices are tentatively rebounding after seller exhaustion kicked in as investors await the next developments on the trade front and as earnings season begins.”
Oil prices were supported ahead of the signing at the White House on Wednesday of Phase 1 trade deal, which marks a major step in ending a dispute that has cut global growth and dented demand for oil.
Analysts emphasised that, with traders already pricing in the signing of the deal, there is more downside risk to prices, regardless of whether the deal is signed, they might have bought the rumours, sell the fact scenario unfolding.
Separately, U.S. crude oil inventories were expected to have fallen last week, a preliminary Reuters poll showed on Monday, helping to boost prices.
The poll was conducted ahead of reports from the American Petroleum Institute (API), an industry group, and the Energy Information Administration (EIA), an agency of the U.S. Department of Energy.
The Daily Times had earlier reported that oil prices surged to their highest recently, after a U.S. drone strike killed an Iranian commander on Jan. 3 and Iran retaliated with missiles launched against U.S. bases in Iraq but they slumped again as Washington and Tehran retreated from the brink of direct conflict last week.