Oil prices gain 2% despite rising supplies concerns

Oil futures gained nearly 2% on Friday as comments from a top U.S. official raised optimism for a U.S.-China trade deal, but worries about increasing crude supplies capped prices.

Benchmark Brent crude rose $1.04, or 1.7%, to $63.32 a barrel, while West Texas Intermediate crude rose 96 cents, or 1.7%, to $57.73 a barrel. Brent and WTI were both on track to post their second straight weekly gain. Brent was due to rise 1.4%, and WTI was set to gain 0.9%.

U.S. Commerce Secretary Wilbur Ross said in an interview on Fox Business Network on Friday that there was a very high probability the United States would reach a final agreement on a phase one trade deal with China.

“We’re down to the last details now,” Ross said.

U.S.-China trade talks were set to continue with a telephone call on Friday.

A monthly report from the International Energy Agency weighed on prices, after the agency estimated that non-OPEC supply growth would surge to 2.3 million barrels per day (bpd) next year compared with 1.8 million bpd in 2019, citing production from the United States, Brazil, Norway and Guyana.

“Today’s Monthly IEA release offered some bearish aspects in the form of an unexpected upward adjustment in non-OPEC oil supply growth for next year that briefly forced WTI values to below yesterday’s lows,” said Jim Ritterbusch, president of Ritterbusch and Associates.

OPEC Secretary General Mohammad Barkindo had painted a more upbeat picture earlier this week, saying growth in rival U.S. production would slow in 2020, although a report by the group had also said demand for OPEC oil was expected to dip.

OPEC said demand for its crude would average 29.58 million barrels per day (bpd) next year, 1.12 million bpd less than in 2019, pointing to a 2020 surplus of about 70,000 bpd.