Oil edges up but US-China trade tensions curb gains

Oil steadies after Friday’s falls but trade disputes still weigh

Adding to rising storage levels, the U.S. Energy Information Administration (EIA) said on Tuesday that it expects domestic crude oil production in 2019 to rise by more than previously expected, driven largely by growing U.S. shale output.

Oil markets stabilised on Monday after slumping around 2 percent last Friday on concerns over an intensifying trade dispute between the United States and China, as well as increased USA drilling activity.

U.S. President Donald Trump promised a swift response to a suspected chemical attack in Syria.

"Investors may start pricing in a much higher risk premium", said Hussein Sayed, chief market strategist at FXTM. That was the highest finish for the most active contract since December 1, 2014, according to FactSet.

West Texas Intermediate crude futures CLc1 gained 3.3 percent, or $2.09, to settle at $65.51 a barrel. Shanghai trading will resume on Monday. "Usually, what the Saudis want, the Saudis get", said Flynn.

Also helping were comments from Saudi Energy Minister Khalid al-Falih, who said oil cartel OPEC will continue to steward the market. While it may be tough to finger one specific catalyst, the weaker dollar, followed by geopolitical unrest over Venezuela, Iran, Russia, Syria, N Korea, and of course China, are likely culminating in somewhat of a ideal storm, helping to lift oil prices.

Virgin Galactic conducts first rocket-powered test since 2014 crash
Virgin Galactic successfully conducted the first flight of its rocket powered spaceplane, the VSS Unity , Friday. The plane reached a maximum height of 84,271 feet (15.9 miles, or 25.7 kilometers), Virgin Galactic said.

Gasoline futures on NYMEX also jumped, gaining 2.93% to $2.0423 a gallon, as the DoE's Short-Term Energy Outlook showed the average retail price hitting $2.74 in Summer 2018, nearly 14% more than in the year before.

While "there is a lot of positive news for the recent move higher in oil", said Scott Gecas, senior strategic account executive at Long Leaf Trading Group, "the biggest factor to me is last week's inventory report, [which] showed a huge 4.6 million barrel decline" in USA crude stocks.

Industry group the American Petroleum Institute is due to release its weekly report yesterday.

OPEC and other producers, including Russian Federation, agreed to cut output by about 1.8 million barrels per day (bpd) in November last year to slash global inventories to the five year-average. "However, oil market fundamentals are tightening and oil prices looks set to be squeezed higher as long as OPEC+ sticks to its cuts".

May natural gas ended at $2.656 per million British thermal units, down 1.4%.

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