Yemisi Izuora
Oil prices appreciated Friday, easing early losses after China agreed to go into talks with the U.S. government on January 7-8 to seek solutions to a trade dispute between the world’s two biggest economies.
Brent crude futures, were at $56.33 per barrel up 38 cents, or 0.7 per cent from their last close, while the U.S. West Texas Intermediate (WTI) crude oil futures were at $47.73 per barrel, up 64 cents, or 1.4 per cent.
Both benchmarks are on track for solid gains in the first week of 2019 trading despite rising concerns that the Sino-American trade war will lead to a global economic slowdown.
The firmer prices came after China’s commerce ministry said it would hold vice-ministerial level trade talks with U.S. counterparts in Beijing on January 7-8.
The two nations have been locked in a trade war for much of the past year, disrupting the flow of hundreds of billions of dollars worth of goods and stoking fears of a global economic slowdown.
Data for December from the Institute for Supply Management (ISM) on Thursday showed the broadest U.S. slowdown in growth in a decade.
Leading economies in Asia and Europe have already reported a fall in manufacturing activity.
“Led by a sharp fall in the U.S. ISM and China’s PMI the global manufacturing PMI fell to 51.5 in December…, a 27-month low,” Morgan Stanley said in a note following the release of the ISM data.
The U.S. bank said the data “increased the downside risks to an already moderating global growth outlook.”
Despite the market turmoil, traders said oil prices are expected to receive some support as supply cuts announced late last year by the Organization of the Petroleum Exporting Countries (OPEC) kick in.
OPEC oil supply fell by 460,000 barrels per day (bpd) between November and December, to 32.68 million bpd, a Reuters survey found on Thursday, as top exporter Saudi Arabia made an early start to a supply-limiting accord. Iran and Libya, which are exempt from cuts, posted involuntary supply declines.