Oil futures climbed on Monday, as OPEC and its allies continue to cut back on crude production, but prices for the commodity trade below the session’s best levels, with traders taking on a more cautious approach toward riskier assets.
U.S. benchmark stock indexes turned lower[1], leading toward risk-off sentiment and prompting oil to pare earlier gains, as traders gave up some earlier optimism toward a potential U.S.-China trade deal, which is expected to have a direct impact on crude demand.
April West Texas Intermediate crude CLJ9, +0.61%[2] added 37 cents, or 0.7%, to reach $56.7 a barrel on the New York Mercantile Exchange, after trading as high as $57. On Friday[3], the contract booked a roughly 2.6% weekly decline, according to Dow Jones Market Data.
Global benchmark May Brent LCOK9, +0.34%[4] gained 29 cents, or 0.5%, to trade at $65.36 a barrel on ICE Futures Europe, down from a high at $66.34. Prices based on the front-month contract saw a weekly loss of 3.2% on Friday.
U.S. and China could reach a trade deal as early as this month, according to a report from The Wall Street Journal[5]. Beijing has offered to lower tariffs and other restrictions on American farm, chemical, auto and other products, while Washington is considering removing most, if not all, sanctions levied against Chinese products since last year.
Progress in talks are significant in oil trading because China is one of the biggest importers of crude and the Sino-American tariff spat was seen as a potential threat to the uptake of supplies. Moreover, the tariff tiff was also seen as hurting expansion of the two largest economies in the world.
Crude had been mostly supported in recent weeks by continued signs that the Organization of the Petroleum Exporting Countries and its allies were delivering on promised production curbs.
Russian Energy Minister Alexander Novak told reporters that Russia will bring its oil production cut to 228,000 barrels a day from the October level, Reuters reported Monday[6]. OPEC and its allies, including Russia, had pledged to reduce their total production by 1.2 million barrels a day from October output levels for the first six months of this year.
Also, three sources told Reuters[7] that OPEC and its partners are unlikely to decide on output policy at the cartel’s next meeting in April because it would be too early to get a clear picture of the impact of their supply cuts.
Meanwhile, data on Friday that reflected OPEC’s continued...