By Peter Nurse
Investing.com - Oil prices are on the rise again. And this time it’s hope for global growth that’s the reason, not instability in the Middle East.
West Texas Intermediate prices had surged to eight-month highs above $64 a barrel and Brent to a near four-month peak over $71 in the aftermath of the killing of the Iranian general Qassem Soleimani by the U.S. government, before falling back sharply as the two countries successfully sought to de-escalate the tensions.
Now, prices are back on an upward path. At 09:00 ET (14:00 GMT), U.S. crude futures traded 0.8% higher at $58.55 a barrel. International benchmark Brent futures also climbed 1% to $64.86.
Hopes that the global economy can return to cruising speed were chiefly behind the move, bolstered in particular by news that China’s foreign trade rebounded well above expectations in December. Exports came in 7.6% up on the year, while imports rose by an even more impressive 16.3%. Imports of crude played a large role in that: Reuters reported arrivals of 45.48 million tons - an average of 10.7 million barrels a day - in December, the third-highest monthly number ever.
The numbers were arguably inflated by a last-minute dash by independent refiners to fill their import quotas before year-end but they still appeared to point to Chinese industrial activity recovering.
Further helping sentiment, the two economic superpowers - China and the U.S. - are scheduled to sign a trade pact on Wednesday. The exact details of the deal aren’t known yet, but earlier Tuesday the U.S. authorities dropped the designation of China as a currency manipulator. This reverses a move made last summer when relations were at a low point.
Later Tuesday, the American Petroleum Institute will release its weekly assessment of U.S. oil supplies. Analysts expect the official government data to show a net draw of 750,000 barrels of from crude stocks.