Mubasher: Oil prices rose on Wednesday supported by optimism that the ongoing talks between the UK and the European Union (EU) could yield a Brexit deal, according to Reuters.
Moreover, Brexit hopes were accompanied by signals from the Organization of the Petroleum Exporting Countries (OPEC) and their allied producers on the possibility of further output cuts.
However, gains were capped by weaker fuel demand outlook amid lingering worries over a global economic slowdown, as well as expectations of another build-up in the US crude stockpiles.
By 10:05 am GMT, US Nymex crude futures jumped by 0.61% to $53.13 per barrel (pb), while global benchmark Brent futures rose by 0.37% to $58.96 pb.
The International Monetary Fund (IMF) warned that the trade conflict between the US and China would send global growth to its slowest pace since the financial crisis a decade ago.
“Prices are under pressure from increasing pessimism about the global economy and subsequent demand-side concerns,” oil broker PVM analyst Stephen Brennock was quoted by the news agency.
On the other hand, Brexit negotiations continued through the early hours of Wednesday as UK Prime Minister Boris Johnson seeks to hammer out a deal ahead of a critical summit of the EU leaders this week.
Nevertheless, it remained unclear if the UK could avert another delay to its 31 October departure.
Should the UK reach an agreement to avoid a disorderly Brexit, economic growth will be supported and in turn oil demand, analysts told Reuters.
Furthermore, OPEC’s Secretary General Mohammad Barkindo stated that the producer club “will do whatever [is] in its power” to keep the market stable.
Barkindo previously raised the possibility of implementing deeper cuts to oil output as an option.
In the US, crude oil stockpiles are expected to rise by 2.8 million barrels last week, according to analysts polled by Reuters.
The American Petroleum Institute (API) is due to publish its weekly report later in the day, ahead of the official figures from the US Energy Department.
