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Oil prices were steady on Tuesday, hanging onto gains from the previous session, after comments from the United States and China kept alive hopes that the world's two largest economies are soon to agree on ending their trade war.
Brent crude futures were down 1 cent at $63.64 at 0331 GMT, after rising 0.4 per cent in the previous session. West Texas Intermediate crude futures fell 5 cents at $57.96, having risen 0.4 per cent on Monday.
Top trade negotiators from China and the United States held a phone call on Tuesday morning, China's Commerce Ministry said, as the two sides try to hammer out a preliminary “phase one” deal in a trade war that has dragged on for 16 months. “Oil prices tend to be strongly correlated to trade news flows,” said Stephen Innes, chief Asia market strategist at AxiTrader. “Optimism over (a) trade deal remains supportive for prices.”
China and the United States are “moving closer to agreeing” on a “phase one” trade deal, the Global Times - a tabloid run by the Chinese Communist Party's official People's Daily - reported earlier.
Still, the Global Times report noted that Washington and Beijing had not agreed on specifics or the size of rollbacks of tariffs on Chinese goods. Beijing's insistence that Washington roll back the Trump administration's tariffs has been a major sticking point.
On the supply side, the Organization of the Petroleum Exporting Countries (OPEC) meets on December 5 at its headquarters in Vienna, followed by talks with other oil producers, including Russia, that have agreed to reduce output to support prices, a group known as OPEC+. The broader producer group is widely expected to extend its 1.2-million-barrel-per-day supply cut to the middle of 2020.
Analysts at JP Morgan expect that OPEC+ may extend the output cuts until the end of 2020, the bank said in a note. In the US, crude oil stockpiles are expected to have declined by 300,000 barrels last week, according to a Reuters poll of analysts. It would be the first decline in five weeks if confirmed.
The poll was conducted ahead of reports from the American Petroleum Institute (API), an industry group, and the Energy Information Administration (EIA). The API is scheduled to release its data for the latest week at 4:30 p.m. EST (2130 GMT) on Tuesday, and the weekly EIA report is due at 10:30 a.m. on Wednesday.
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