(Bloomberg) -- Oil advanced, shedding earlier losses, amid growing optimism about prospects for a settlement in the long-running U.S.-China trade war.
Futures rose 0.4% in New York on Monday. In a bid to address a key sticking point in the protracted trade dispute between the world's two largest economies, China pledged to tighten intellectual property rules. The ongoing impasse has imperiled demand for petroleum-based fuels.
“I've been surprised oil hasn't moved up more,” said Bill O'Grady, chief market strategist at Confluence Investment Management LLC in St. Louis. “We've gotten a lot of optimism in the financial markets from a few superficial changes to China trade policy.”
Crude has rebounded since early October on signs of progress toward a trade deal but a flood of supply from American shale fields and other sources have limited gains. Oil investors are growing restless as the negotiations drag on, with money managers cutting their net bets on a West Texas Intermediate rally by 13% in the week ended Nov. 19.
West Texas Intermediate for January delivery rose 24 cents to settle at $58.01 a barrel on the New York Mercantile Exchange.
Brent for January settlement rose 26 cents to close at $63.65 on the London-based ICE Futures Europe Exchange. The global benchmark traded at a $5.64 premium to WTI.
China's concession on intellectual property comes as trade negotiators have been trying to bridge remaining differences including Beijing's pledges to buy American grain and meat, and open China's economy more to foreign companies.
“The market is still highly driven by U.S.-China trade and any tap in negotiations and headlines would be very significant in terms of driving market sentiment and pushing things,” said Kyle Cooper, research director of IAF Advisors in Houston.
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To contact the reporter on this story: Jacquelyn Melinek in New York at jmelinek@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Joe Carroll, Carlos Caminada
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