Still, signs suggest a trade deal and other positive developments are impending: File Image/PixaBay
Last week's agreement by the Organization of the Petroleum Exporting Countries (OPEC) to deepen its production cuts into 2020 had lasting positive effects on crude prices on Tuesday - but only minimally, as the familiar concern of China mitigated gains.
Brent settled up 9 cents at $64.34 per barrel, while West Texas Intermediate oil rose 22 cents to $59.24 per barrel.
Gene McGillian, director of market research at Tradition Energy, explained the reasoning of traders' behaviour by noting that "Now that the producers announced a production cut last week, the market is holding just below three-month highs, [but] without a U.S.-China trade deal, the market is having trouble heading into a new leg in this rally."
Gene McGillian, VP of market research, Tradition Energy
Without a U.S.-China trade deal, the market is having trouble heading into a new leg in this rally
Still, indications on the economic front lean towards the positive, ie: the growth rate of China's commodities imports has reportedly accelerated in recent months, indicating the country's stimulus efforts are working and the trade war may not be as impactful as feared.
Also, The Wall Street Journal reported that U.S. and China officials are laying the groundwork for a delay of a fresh round of tariffs, after U.S. president Donald Trump indicated he does not want to implement new tariffs - but requires "movement" from China in order to avoid them.
Yet more potentially positive news on Tuesday came in the form of a Reuters poll forecasting that U.S. crude inventories dipped last week - although it's unclear if the notoriously unreliable poll has any influence left over traders.
Meanwhile, analysts are still assessing the possible effects of OPEC's decision to deepen its output cuts, and Alexander Dyukov, CEO of Gazprom Neft, told media on Tuesday that it would help support oil prices at $55-$65 per barrel in the first quarter.
But that spells disappointment for Saudi Arabia, which has reportedly designed its next year's budget under the assumption that Brent will average about $65 per barrel - barely higher than where the benchmark traded on Tuesday and in contrast with a price of $80 that was originally built into the kingdom's public finances for 2019.
According to Bloomberg, the Saudis would need oil to trade at $89 to balance its budget next year.