Investing.com – Oil bears may have to wait for more dire news on the U.S. economy or crude oversupply as a puzzling surge in market optimism is offsetting all the bad news.
After rising more than 1% for two days in a row on Saudi jawboning about production cuts and optimism over U.S.-China trade talks, futures of New York-traded West Texas Intermediate crude and London’s Brent oil were up again Thursday, despite falling briefly on weak U.S. retail sales data.
was up 13 cents, or 0.2%, at $54.03 per barrel by 11:20 AM ET (16:20 GMT).
, the global oil benchmark, was up 55 cents, or 0.9%, at $64.16 per barrel.
WTI and Brent are up 19% year to date, though the London benchmark is trading at its highest premium to WTI since 2017 at a gap of more than $10.
“Overall, it appears to me that the ‘lows have changed’ ” said Scott Shelton, energy futures broker at ICAP (LON:) in Durham, N.C., adding that while there was no real event driving the market “prices are just strong”.
“Asian crude is driving this market,” said Shelton, who notes that backwardation in Brent — where front-month prices were positively higher to the second month — was steepening amid strengthening in global refining margins. “I would also think the downward momentum of prices ending is adding some additional support for (hedge fund) buying.”
U.S. retail sales 1.2% in December, the first time in 10 months, the Commerce Department reported. Economists had forecast a gain of 0.1% for the period. also came out weaker than expected, while were also higher than expected last week.
Shares on Wall Street tumbled, offsetting some of Thursday’s gains in oil, on anticipation that the slowdown could continue this year as American consumers worry over domestic tensions, the global economy and unresolved U.S.-China trade issues.
Oil had rallied earlier on a Bloomberg report that President Donald Trump was considering a 60-day extension to the March 1 deadline requiring China to reach a trade deal with the U.S. or risk having tariffs on $200 billion worth of goods raised to 25% from 10%.
A trade delegation led by U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer has been huddled in high-level talks with Chinese counterparts, led by Vice Premier Liu He, in Beijing since Tuesday.
Also lending early support to oil were China’s crude oil imports, which rose 4.8% in January to an average of 10.03 million barrels per day. It was the third-straight month that imports had exceeded the 10 million bpd mark.