Published: Mon, January 14, 2019
Business | By Eloise Houston

Stocks boosted by US-China trade hope, oil prices soar

Stocks boosted by US-China trade hope, oil prices soar

Abhishek Kumar, senior energy analyst at Interfax Energy in London, said higher oil prices so far this year "could well define a near-term trend despite uncertainties surrounding the US-China trade talks".

On Tuesday, oil prices extended gains.

Futures in NY have advanced 10 percent this week, as Saudi Arabia pledged that a producer coalition it's leading will keep the market in balance. Investors are hopeful that more and higher-level negotiations will follow.

To counter rising US output, the Organization of the Petroleum Exporting Countries and its allies, including Russian Federation, reached a deal to rein in supply that officially began in January. In December, U.S. President Donald Trump and Chinese leader Xi Jinping agreed to a 90-day tariffs ceasefire, for negotiators to soothe tensions that have unsettled trade. A deal between the nations could boost flagging global growth that underpins oil demand.

Saudi Arabia's energy minister said on Wednesday he was confident that supply cuts started in late 2018 by the Organisation of the Petroleum Exporting Countries (OPEC) and some allies, including Russian Federation, aimed at reining in oversupply would bring the oil market into balance.

On Friday, oil prices dropped, snapping its consecutive rally for nine days, weighed down by the rising greenback and sliding energy stocks due to concerns caused by the ongoing USA government shutdown.

Crude oil prices were up around 1 percent at the start of trading Wednesday through OPEC curbing oil production and with the ongoing trade talks between the USA and China generating investor optimism.

Gold prices rose on Wednesday, with spot gold XAU= up 0.68 percent to $1,293.65 per ounce. It added 23 cents to $52.94 per barrel on Thursday. They are both expecting consecutive weekly gains, rising about 8% and 6% respectively.

Saudi Arabia said earlier this week that supply curbs started in late 2018 by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers including Russian Federation, would bring the oil market into balance.

"We see the oil market as well balanced into the foreseeable future, as the petro-nations make space for further USA shale production growth", said Norbert Ruecker, head of commodity research at the bank. The U.S. rig count is still much higher than a year ago when 752 rigs were active.

"If you want to gauge how investors are viewing the trade talks, just watch tech, and semiconductors in particular", said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago. Negotiations were "extensive, in-depth and detailed", and laid the foundation for the resolution of issues of mutual concern, China's Ministry of Commerce said in a statement. The Reuters report says China pledged to buy "a substantial amount" of agricultural, energy, and manufacturing goods from the U.S.

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