Oil Rises on Trade Hopes, Saudi Pipeline Disruption

05/14/19 03:16 PM EDT
By Amrith Ramkumar 

-- Oil prices rose Tuesday, stabilizing on hopes for a U.S.-China trade deal and a pipeline disruption in Saudi Arabia.

-- West Texas Intermediate futures, the U.S. crude benchmark, advanced 1.2% to $61.78 a barrel on the New York Mercantile Exchange. Prices had fallen in four of the five sessions through Monday to their lowest level since March 29. They have dipped 6.8% below their April peaks, though they remain up 36% in 2019.

-- Brent crude, the global price gauge, added 1.4% to $71.24 a barrel on London's Intercontinental Exchange.


Trade Fears: Oil has swung alongside stocks and other risk assets in recent sessions on fears that higher tariffs in the U.S.-China trade spat will slow global growth and commodity demand. After the U.S. raised tariffs on $200 billion of Chinese imports Friday, China on Monday said it would boost duties on about $60 billion of U.S. imports starting June 1 in response.

Still, some analysts are hopeful that the two sides will reach a compromise given the stakes for the world's two largest economies, stoking volatility in recent days. President Trump has also left the possibility open to tariffs being removed if the two sides can reach an agreement, though negotiations last week in Washington ended without a deal.

"When the time is right we will make a deal with China," Mr. Trump said on Twitter Tuesday.

Stocks around the world and other commodities also rebounded Tuesday following a rocky session to start the week.

Saudi Pipeline: A supply disruption in Saudi Arabia, the world's largest crude exporter and de facto head of the Organization of the Petroleum Exporting Countries, was also supporting oil on Tuesday. Saudi Arabia said it halted pumping on a major oil pipeline after it was hit by armed drones, the latest attack on its energy infrastructure after two of its oil tankers were damaged near the Strait of Hormuz over the weekend.

The armed drones attacked two pump stations on a pipeline that transports oil from the Eastern Province to Yanbu port on the Red Sea, Saudi Energy Minister Khalid al-Falih said in a statement.

Similar geopolitical disruptions around the world have boosted oil in recent months by creating uncertainty around global supply and crude flows.


Inventories: Investors were looking ahead to Wednesday stockpile data from the Energy Information Administration, as some are still wary that steady output from the U.S. and OPEC could keep prices contained moving forward. U.S. stockpiles fell during the week ended May 3, after climbing in five of the previous six weeks to their highest level since September 2017.

Inventories are expected to have fallen 1.4 million barrels last week, per the average target of 10 analysts and traders surveyed by The Wall Street Journal.

Some bullish analysts are hopeful that higher demand during the summer travel season will deplete stockpiles and that an extension of OPEC output cuts beyond June will keep oil prices supported. OPEC's monthly oil market report Tuesday showed supply from Iran and Saudi Arabia fell last month, though rising output from Nigeria and Iraq offset some of those declines.


-- The International Energy Agency releases its monthly oil report Wednesday.

-- The American Petroleum Institute, an industry group, releases its estimates for U.S. inventories last week later Tuesday, followed by official EIA figures Wednesday.

--Summer Said contributed to this article.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com


(END) Dow Jones Newswires

May 14, 2019 15:16 ET (19:16 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.