Crude Prices Rise Again - But Market Lethargy Baffles Analyst

Meanwhile, more evidence comes that demand is quite healthy: File Image/PixaBay

Given crude traders' hypersensitivity to headlines, it's not surprising that word from China media of Beijing and Washington agreeing on the first phase of the long-awaited trade deal caused oil prices on Monday to escalate - albeit modestly.

Brent ended the session up 26 cents at $63.65 per barrel, while West Texas Intermediate settled up 24 cents at $58.01.

China's Global Times on Monday cited experts close to the government as saying that China and the U.S. have reached a broad consensus on the first phase of the trade deal, minus some differences about tariff removals; this comes on the heels of Robert O'Brien, national security advisor in Washington, stating over the weekend that an initial trade agreement with China was still possible by the end of the year.

Meanwhile, Monday saw more evidence that despite the analytical angst over the damage the U.S./China trade war was doing to the world economy and, by extension, crude demand, demand is nothing less than robust.

Data from the General Administration of Customs released on Monday showed that China's crude oil imports from Saudi Arabia rose 76.3 percent in October, boosted by demand from new refiners.

Saudi shipments grew to 1.98 million barrels per day (bpd), compared with 1.74 million bpd in September and 1.12 million bpd in same period last year; also, China's Malaysian crude imports in October doubled from the last year's level, reaching 1.95 million tonnes, while imports of U.S. crude in October reached 908,422 tonnes, up from 517,982 tonnes in September.

Still, the general sentiment among crude traders seems to be one of cautious optimism: John Kemp, commodities analyst for Reuters, wrote on Monday that "Neither the trade deal nor the slowdown in U.S. shale output is certain, however, and there is a risk of the market getting ahead of itself."

For his part, Bill O'Grady, chief market strategist at Confluence Investment Management, is baffled by trading behaviour: he said, "I've been surprised oil hasn't moved up more: we've gotten a lot of optimism in the financial markets from a few superficial changes to China trade policy."