Oil soars over 3% on easing U.S.-China trade tensions

They are coming back chuck full of cell phone and toys for the kiddies….just in time for Christmas

NEW YORK (Reuters) – Oil prices rose over 3% on Tuesday after the United States said it will delay imposing a 10% tariff on certain Chinese products, easing concerns over a global trade war that has pummelled the market in recent months. Those Chinese products include laptops and cell phones. The tariffs had been scheduled to start next month. Brent LCOc1 futures were up $2.08, or 3.6%, to $60.65 a barrel by 11:07 a.m. EDT (1507 GMT), while U.S. West Texas Intermediate crude CLc1 was up $1.86, or 3.4%, to $56.79. Prior to Tuesday’s gain, Brent was trading down more than 20% since hitting its 2019 high in April. Earlier Tuesday, the premium of Brent over WTI WTCLc1-LCOc1 fell to its lowest since March 2018. The U.S. dollar index .DXY jumped and bond yields also turned higher after the U.S. Trade Representative said the Trump administration would delay imposing the tariffs on certain Chinese products. Oil prices see-sawed earlier in the day, caught between demand worries and rising global supplies and expectations for deeper production cuts from leading producers. U.S. oil output from seven major shale formations was expected to rise by 85,000 barrels per day (bpd) in September to a record 8.77 million bpd, the Energy Information Administration forecast in a report. “The big test now is whether the shale producers can keep growing production at these lower price levels,” said Callum Macpherson, head of commodities at Investec. “This could be the start of a re-adjustment process from the artificially high prices OPEC is implicitly trying to maintain down to something more in line with the marginal shale production costs,” Macpherson said. Saudi Arabia, the de-facto leader of the Organization of the Petroleum Exporting Countries, last week said it planned to keep its crude exports below 7 million bpd in August and September to help to drain global oil inventories. The kingdom’s plan to float its national oil company Saudi Aramco in what could be the world’s largest initial public offering (IPO) gives it further impetus to boost prices. “With Saudi Aramco reportedly eyeing an IPO once again, there is some support to the idea that Saudi Arabia has a heightened interest in strong crude prices and will cut its own output accordingly,” Vienna-based consultancy JBC Energy said. OPEC and its allies, known as OPEC+, have agreed to cut 1.2 million bpd of production since Jan. 1. In the United States, analysts forecast crude stockpiles dropped by 2.8 million barrels last week, according to a Reuters poll. The American Petroleum Institute (API), an industry group, is due to release its inventory report at 4:30 p.m. EDT (2030 GMT) on Tuesday, followed by U.S. government data on Wednesday morning. [EIA/S]