Oil trades at three-month high on demand strength, trade hopes

Oil held at a three-month high as signs of improving demand buoyed a market momentarily roiled by confusion over U.S.-China trade.

Futures earlier erased losses in New York after President Donald Trump said the deal with Beijing was “fully intact” following remarks from a trade adviser that were interpreted as an end to the agreement. Crude has been bolstered in recent days by a lifting of lockdown restrictions in some U.S. states.

Oil has rebounded since plunging below zero in April and is now trading at levels last seen before Russia and Saudi Arabia engaged in a damaging, though short-lived, price war. Some of the world’s biggest traders have expressed optimism that demand is making a comeback, while OPEC+ laggards are reported to be falling in line with supply cuts.

“If you look at projections of flattening the curve of crude inventories, the peak is now lower and it will come sooner because you’ve got a better outlook on demand than originally feared,” said Peter McNally, an analyst at Third Bridge Group Ltd.

The weekly round of U.S. inventory data begins with industry figures on Tuesday. A Bloomberg survey is predicting that stockpiles rose by 2 million barrels last week, a sign that the recovery is likely to be uneven. If confirmed by government data Wednesday, it would be a third weekly gain and a further sign that the market has more work to do to whittle down a glut.