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Oil steadied near $56 a barrel as hints of a trade detente between the U.S. and China, along with the prospect of monetary stimulus, buoyed financial markets.
Futures were little changed in New York after settling 2.4% higher on Monday. U.S. Commerce Secretary Wilbur Ross said that America will delay restrictions on some of China’s Huawei Technologies Co. Ltd.’s business operations. Investors viewed the move as another sign, after President Donald Trump’s postponement of new tariffs, that the clash between Washington and Beijing may ease and the outlook for global growth recover.
“There is no guarantee of continuous and sustained strength, nevertheless, there is currently a kind of feel-good factor surrounding the oil market,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London.
Crude has swung between gains and losses this month as investors reacted to trade war developments. Germany is preparing fiscal stimulus measures to head off the chances of a deep recession, while more Federal Reserve rate cuts are expected to shore up American growth. Analysts are forecasting that U.S. crude stockpiles last week fell for the first time in three weeks, a positive sign for oil markets.
West Texas Intermediate crude for September delivery slipped 10 cents to $56.11 a barrel on the New York Mercantile Exchange on Aug. 20. The contract, which expires Aug. 20, increased $1.34 on Aug. 19. The more active October contract fell 16 cents to $55.98.
Brent for October settlement declined 6 cents to $59.68 on the ICE Futures Europe Exchange after climbing 1.9% on Aug. 19. The global benchmark crude traded at a premium of $3.72 a barrel to WTI, having earlier touched the lowest since March 2018.
The Federal Reserve will hold its annual symposium in Jackson Hole, Wyo., later in the week, where the speech of Chairman Jerome Powell will be closely watched.
American crude stockpiles fell by 1.4 million barrels in the week through Aug. 16, according to the median estimate in a Bloomberg survey. The official data from the Energy Information Administration is due Aug. 21.