Oil extends gains on prospect of deeper OPEC output cuts, trade talks hopes

West Texas Intermediate (WTI) crude futures rose 20 cents

Oil prices rose early on Friday, building on gains in the previous session, after producer club OPEC hinted at making deeper cuts in supply while optimism was revived over talks between the United States and China to end their trade war.

International benchmark Brent crude futures were at $59.34 a barrel by 0034 GMT, up 24 cents, or 0.4%, from their previous settlement. Brent settled up 1.3% at $59.10 a barrel on Thursday.

West Texas Intermediate (WTI) crude futures rose 20 cents, or 0.37%, from their last close to $53.74 per barrel. In the previous session, WTI settled 1.8% higher at $53.55 a barrel.

On Thursday Mohammad Barkindo, Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC), said all options were on the table, including a deeper supply cut to balance oil markets. A decision would be taken at a December meeting between the OPEC and its partners, he said.

OPEC lowered its 2019 global oil demand growth forecast to 0.98 million barrels per day (bpd), while leaving its 2020 demand growth estimate unchanged at 1.08 million bpd, according to OPEC’s monthly report.

Beyond OPEC, trade talks between the United States and China also remained on market radar as the world’s top two economies seek to resolve a more-than-a-year-long trade row that has slowed global economic growth and curbed fuel consumption.

“The United States is the largest global consumer of oil while China, the biggest driver of year-on-year oil demand growth,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.

“The most significant sentiment driver hinges on the outcome of the trade talks which, if (they) end on a positive note, could go along way to begin to repair the economic damage done … these economic powerhouses would need more oil,” said Innes.

Top U.S. and Chinese negotiators wrapped up the first of two days of scheduled trade talks on Thursday, with business groups expressing optimism that the two sides might be able to ease tensions and delay a U.S. tariff hike set for next week.