Oil set for the longest winning streak in 30 years as traders bask in improved US-China sentiment
- Oil has rallied in the new year, with a nine-day run of gains for WTI, its best run since 2010.
- Brent crude is also rallying, if those contracts close up today - a 10th consecutive session - it would be the futures' best streak for 30 years.
- Traders have been buoyed by positive sentiment out of US-China trade war talks and efforts by Saudi Arabia and OPEC and others to stabilize markets, after plunging last month.
- "The market [is] returning to some sort of order, having previously been out of whack," said Stephen Innes, head of trading for Asia Pacific at futures brokerage Oanda.
- Brent crude is up 0.6% as of 8.55 a.m in London (3.55 a.m EST).
The wobbles in stock markets have been grabbing all the attention lately, but meanwhile, oil is enjoying a stunning rally into the new year.
Oil traders are factoring in an improvement in US-China trade relations and continued efforts by OPEC and others to stabilize the market after a brutal end to last year.
Brent crude futures are now trading up for their 10th consecutive day, which would mark its best performance since the introduction of futures contracts in June 1988. This week's performance has seen Brent rise 8.4%, its best weekly gains for over two years as improved sentiment boosts the commodity's performance.
Fore WTI, the US benchmark, oil has risen 24% since hitting a low on Christmas eve.
"The macro drivers of prices has been the more dovish Federal Reserve and better news coming out of the US-China trade dispute," Stephen Innes, head of trading for Asia Pacific at futures brokerage Oanda, sadi in an interview. "The market is reading between the lines that any deal would boost China's economy and really improve demand."
US trade representatives were in China for talks earlier this week, which raised hopes of a trade deal that would have a positive impact on oil prices.
Similarly, last December's "OPEC+" summit in Vienna brought a round of supply cuts to the oil market, which are now finally being priced in amid a greater risk-on atmosphere. Despite that prices are still around 30% lower than their October highs.
Saudi Arabia's energy minister, Khalid Al-Falih, said that pledged reductions of 1.2 million barrels a day are "more than sufficient to balance the market." Data out of Saudi Arabia supports the proposed axe in supply and demonstrated a cut in exports to the US with inventory figures also broadly positive.
Investor sentiment has also been boosted by comments from the Federal Reserve. Fed Chairman Jerome Powell and Richard Clarida have said that the central bank will be cautious about pushing ahead with future rate hikes after raising interest rates four times last year.
Brent crude is trading up 0.6% as of 8.55 a.m in London (3.55 a.m EST) while WTI is up 0.9%.