Oil Rises for Fourth Day as Risk Rally Counters Stockpile Gains

(Bloomberg) -- Oil rose for a fourth day, with global benchmark Brent crude close to topping $70 a barrel for the first time since November, on optimism over the global economy and as OPEC’s curbs offset signs of rising U.S. stockpiles.

Futures in London added as much as 0.7 percent after climbing 2.3 percent over the previous three sessions. Crude is being swept along by a rally in global risk assets on speculation the U.S. and China are closer to a deal that’ll resolve trade tensions between the world’s biggest economies. Meanwhile, output cuts by producers including Saudi Arabia helped counter a report that American crude stockpiles rose last week.

Brent oil futures have risen around 30 percent this year on the back of the aggressive output cuts by the Organization of the Petroleum Exporting Countries and its allies, which have been abetted by American sanctions on Iran and Venezuela. A breakthrough in the U.S.-China trade negotiations would brighten a wobbly global demand outlook.

“We have been getting simultaneous signals on both the demand side and supply side that the picture is more price-positive than was previously thought,” said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific Pty in Sydney. “The demand picture is the key driver at the moment.”

Brent for June settlement rose 44 cents to $69.81 a barrel on the London-based ICE Futures Europe exchange as of 7:25 a.m. in London after getting to $69.87 earlier. The global benchmark crude’s premium over West Texas Intermediate widened to $6.90 a barrel for the same month.

WTI for May delivery gained 28 cents, or 0.5 percent, to $62.86 a barrel on the New York Mercantile Exchange after rising as much as 32 cents earlier. WTI climbed 5.5 percent over the previous three sessions.

Trade Talks

Chinese Vice Premier Liu He will resume negotiations with his U.S. counterparts in Washington on Wednesday as both governments push for an agreement to end their protracted trade dispute. Officials from the two countries have resolved most of their trade issues but are still haggling over enforcement mechanisms, the Financial Times reported.

On the supply side, Russian output dropped in March to 190,000 barrels a day below October levels, the country’s energy minister said in a statement, falling short of the 228,000 cut pledged under the OPEC+ deal. That was offset by Saudi Arabia reducing production to a four-year low of 9.82 million barrels a day.

The OPEC+ reductions allayed concerns over an American Petroleum Institute report that was said to show a 3 million-barrel increase in U.S. crude inventories. API also reported lower gasoline and distillates stockpiles.

“There is an assumption that the pull through from the products will more than overcome the crude surplus” CMC’s McCarthy said.

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