Oil climbs the most in two weeks as trade deals boost optimism

Oil posted its largest gain in almost two weeks, swept along in a broader equities rally as the preliminary U.S.-China trade truce and an accord between America, Canada and Mexico fueled optimism about economic growth.

Futures settled 1.2% higher Thursday, as stocks hit record highs. Under the initial settlement between the world’s largest economies, China pledged to increase purchases of U.S. commodities. Also, the Senate approved President Trump’s U.S.-Mexico-Canada (USMCA) trade accord that revamps the 1994 NAFTA agreement.

“The China-U.S. agreement and the Senate passing of USMCA,” will help to boost the economy, said Michael Lynch, president of Strategic Energy & Economic Research Inc. in Winchester, Massachusetts. “After 3 years, here is the first two bits of good news for the economy.”

Prices bounced back after sinking to a six-week low Wednesday when the Energy Information Administration reported domestic petroleum stocks had expanded to the highest levels in four months.

The market would have appeared to have risen more Wednesday if price hadn’t fallen sharply before the U.S.-China trade signing, said Lynch. “The market had worked harder to get prices off that low.”

The Paris-based International Energy Agency in a report forecast China’s oil demand would average 14.1 million barrels a day this year, compared with 13.6 million last year. “China was a source of worry, and concerns were that its demand would slow. But that doesn’t appear to have been the case,” Lynch said.

West Texas Intermediate crude for February delivery rose 71 cents to settle at $58.52 a barrel on the New York Mercantile Exchange after earlier rising the most since Jan. 8.

Brent for March settlement rose 62 cents to $64.62 on the ICE Futures Europe exchange. The global benchmark crude traded at a $6.09 premium to WTI for the same month.