December 13, 2019 11:15 AM, EST

Oil Reaches Three-Month High Above $60 on US-China Trade Pact

a pumpjack near Midland, Texas Callaghan O'Hare/Bloomberg

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Oil rose above $60 a barrel for the first time in almost three months after the U.S. and China agreed on the text of a partial trade deal, giving a boost to the fragile outlook for global oil demand.

Futures climbed as much as 2.2% in New York on Dec. 13, to the highest level since Sept. 17. Chinese officials said the countries agreed not to impose tariffs set to go into effect Dec. 15, and China will increase imports from the U.S. as part of the deal. Prices slipped briefly earlier after U.S. President Donald Trump in a tweet disputed a story that said tariffs would be rolled back.

READ MORE: China Says Deal Agreed, US to Roll Back Tariffs in Stages

Crude is poised for a modest gain this week due to the positive sentiment around the trade deal, having surged by more than 7% last week as OPEC and its allies announced a surprise production cut. Yet as the details of the U.S.-China agreement remain scarce, and concerns linger over whether OPEC will follow through on its agreement, the sources of support for prices appear fragile.

“Risk appetite among financial investors is now likely to remain high thanks to the deal between the U.S. and China,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. Yet “the oil market risks facing a massive oversupply and a pronounced inventory build, at least in the first half of the year.”

West Texas Intermediate for January delivery rose 65 cents to $59.84 a barrel on the New York Mercantile Exchange as of 10:28 a.m. on Dec. 13. Brent for February settlement advanced 1.4% to $65.10 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark traded at a $5.32 premium to WTI for the same month.

In other oil-market news:

• Moody’s Investors Service has a sunny outlook on the global oil and gas industry heading into next year, even as volatile energy prices hammer the sector and add to a mountain of debt.

• The three big oil forecasting agencies all see OPEC producers needing to comply fully with output cuts they agreed in Vienna last week if they are to avoid big builds in inventories in the first half of 2020. But even that may not be enough, as demand estimates from two of them weaken again.

With assistance from James Thornhill.

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