Oil growth by 1.7% with 60% probability of a recession in the US economy in the new year

Oil prices rose by more than 1.5 percent on Monday on hopes that talks in Beijing can resolve a trade war between the United States and China, while supply cuts by major producers also supported crude. Brent crude futures LCOc1 were at $58.04 per barrel at 0751 GMT, up 98 cents cents, or 1.7 percent, from their last close. U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were at $48.85 per barrel, up 89 cents, or 1.9 percent.

Financial markets were riding a relief rally on Monday on expectations that face-to-face trade negotiations between delegates from Washington and Beijing, starting on Monday, would lead to an easing in tensions between the two biggest economies in the world. The United States and Beijing have been locked in an escalating trade spat since early 2018, raising import tariffs on each other’s goods. The dispute has weighed on economic growth.

Meanwhile, German industrial orders dropped in November, official data showed on Monday, as Germany’s exporters suffer from the trade dispute between China and the United States. U.S. bank J.P. Morgan said in a note late last week that “bond and commodity markets appear to be pricing in on average close to a 60 percent chance of a U.S. recession over the coming year compared to a 40 percent chance by our economists and 27 percent chance by the consensus”.

Despite the likelihood of a slowdown, crude future prices were being supported by supply cuts started late last year by a group of producers around the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC Russia. OPEC oil supply fell in December by 460,000 barrels per day (bpd), to 32.68 million bpd, a Reuters survey found last week, led by cuts from top exporter Saudi Arabia. The cuts are aimed at reining in swelling supply, especially in the United States.