Crude oil futures were higher during mid-morning trade in Asia Tuesday on market optimism ahead of the US-China phase one trade deal signing this week.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
However, anticipation of rising US crude stocks capped gains.
At 10:45 am Singapore time (0245GMT), the front-month March ICE Brent crude futures rose 20 cents/b (0.31%) from Monday's settle at $64.40/b, while the NYMEX February light sweet crude contract was 16 cents/b (0.28%) higher at $58.23/b.
According to media reports, US dropped China's label of a currency manipulator ahead of the trade deal, which lifted markets on a fresh wave of optimism.
"Another injection of market optimism ahead of the US-China phase one trade deal signing proved potent in enabling fresh record highs on Wall Street, one that also does Asia markets a favour from an FX [foreign exchange] perspective," IG's market strategist Pan Jingyi said.
"This lifting of China's currency manipulator label may see to some relief for US Dollar/Asian declines, which would be both beneficial to regional markets and US companies with high global income exposure," Pan added.
Despite the positive market sentiment, oil gains were capped in anticipation of rising US crude stocks, a survey conducted by S&P Global Platts on Monday showed.
US crude supply likely extended a counter-seasonal build for a second week last week as strong production levels outweighed an uptick in refiner demand and exports, an S&P Global Platts analysis showed Monday.
Commercial crude stocks likely increased around 500,000 barrels to 431.6 million barrels during the week ended January 10, according to analysts surveyed by Platts.
US crude stocks typically begin building in mid-January after drawing from late-November, as refiners idle units for shoulder-season maintenance.
But with US production averaging near 12.9 million b/d in recent weeks, the seasonal build has been pushed into the final days of December.
Market participants will look to fresh cues from the inventory report by the American Petroleum Institute and the Energy Information Administration due later Tuesday and Wednesday, respectively.
In other news, US officials are working behind the scenes to get Chinese independent refiners to stop importing roughly 200,000 b/d of crude oil and condensates from Iran, in violation of US sanctions, according to analysts and Trump administration officials.
"Just because we haven't seen sanctions rain down on shippers and importers and the independent refiners moving that last 200,000 b/d yet, doesn't mean it's not coming," said Elizabeth Rosenberg, director of the
energy program at the Center for a New American Security and a former senior sanctions adviser at the US Department of the Treasury.
"I fully expect sanctions on the last remaining Iran oil imports in China to be coming, but it could be a matter of time."
As of 0245 GMT, the US Dollar Index was down 0.01% at 97.100.
--Ng Jing Zhi, email@example.com
--Edited by Norazlina Juma'at, firstname.lastname@example.org