(Bloomberg) -- Oil climbed as the U.S. delayed sanctions against Huawei Technologies Co., offering a hint of progress in its trade war with China, and a drone attack in Saudi Arabia highlighted simmering Middle East tensions.
Futures jumped 2.4% to top $56 a barrel in New York on Monday. The U.S. will extend exemptions for customers of the Chinese telecom giant for another 90 days, Commerce Secretary Wilbur Ross said. The move comes a week after President Donald Trump delayed new tariffs on some consumer goods until mid-December.
Meanwhile, the drone strike by Yemeni rebels on the Shaybah field in Saudi Arabia, the source of about 1 million barrels a day, was a reminder of the continuing threats in the heart of global crude production. The attack sparked only a small fire and no disruption to output, Saudi Arabian Oil Co. said in a statement.
Crude has fallen about 15% from a late April peak as the U.S.-China trade spat intensified, casting a pall over an already-weak outlook for global growth. While a series of attacks on tankers and energy facilities in the Middle East have provided some temporary support to prices, oversupply remains a key concern.
The Huawei decision “implies that Trump has had enough and he now realizes this is capable of drilling the global economy into the gutter,” said Bob Yawger, futures director at Mizuho Securities USA in New York. “Speculators are jumping in and pushing oil along with every other risk asset.”
Investors got another bullish sign Monday from a report that Germany was preparing fiscal stimulus to head off the chances of a deep recession in Europe’s largest economy.
West Texas Intermediate crude for September delivery settled $1.34 higher at $56.21 a barrel on New York Mercantile Exchange. The contract will expire Tuesday. The more active October contract rose $1.33 to $56.14 a barrel.
Brent for October settlement increased $1.10 to $59.74 on the ICE Futures Europe Exchange. The global benchmark traded at a premium of $3.60 a barrel to WTI for the same month, close to the smallest gap since March 2018.
Recent phone calls between U.S. and Chinese trade negotiators had been “positive” and more conferences are planned over the next week to 10 days, Larry Kudlow, the White House economic director, said on Sunday.
--With assistance from Tsuyoshi Inajima, Saket Sundria and Sheela Tobben.
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