Oil prices rose on Friday as trade talks continued between the US and China, easing some investors concerns about a global economic slowdown.  However, gains were capped on data showing a rise in US refined product inventories.  Total photo.

Oil prices up over 2 per cent Friday

Oil prices climbed over 2 per cent on Friday as proposed trade talks between the US and China were announced, easing some concerns about a global economic slowdown.  Gains were capped, however, after data from the US government showed an increase in refined product inventories.

By 2:57 p.m., EST, benchmark Brent futures were up $1.21 to $57.16/barrel and US West Texas Intermediate futures gained 96 cents to $48.05/barrel.  This week, Brent is on track to gain approximately 9.3 per cent and US WTI is set for a gain of about 5.7 per cent.

Both Brent and WTI suffered significant losses at the end of last year as investors grew more concerned about a burgeoning oil oversupply and a slowing global economy.

Oil prices and equity markets showed gains on Friday after China’s commerce ministry said Beijing will hold vice-ministerial trade talks with its US counterparts on Jan. 7-8.

The trade war between Washington and Beijing has disrupted the flow of hundreds of billions of dollars in goods and significantly hampered economic growth.  Despite the market’s recent gloomy mood, China’s services sector posted expansion last month, according to a private survey.

“Recent Chinese data is not confirming the doom-and-gloom trend,” Olivier Jakob, oil analyst at Petromatrix told Reuters.  “And you’ve got OPEC cutting.”

OPEC along with Russia and other non-cartel members agreed last month to cut their total production by 1.2 million barrels per day this year.

The market was also boosted by a robust US jobs report.

Oil price gains were limited after US Energy Information Administration data showed a sharp increase in refined product inventories as refiners boosted utilization rates to 97.2 per cent of capacity.

US EIA data showed gasoline stocks rose by 6.9 million barrels last week and distillate inventories were up by 9.5 million barrels.  Analysts polled prior to the release of the data had expected the builds to be under 2 million barrels.

“The significant build in product inventory has put a damper on the oil price rally we saw earlier this morning,” Andrew Lipow, president of Lipow Oil Associates told Reuters.

The EIA reported little change in US crude inventories.

Baker Hughes reported a fall in the US rig count.  US energy firms cut their total oil rig count by eight to 877.  In Canada, the rig count rose by five to 20.