Oil rose on Friday to its highest level in nearly three months as investors cheered progress in resolving the U.S.-China trade dispute and a decisive general election result in Britain.
China's Vice Finance Minister said the first phase of trade negotiations achieved major progress and Beijing has decided to cancel tariffs scheduled to take effect on Sunday. On Thursday, U.S. sources said Washington has set its terms for a deal, offering to suspend some tariffs on goods and cut others in exchange for Chinese purchases of more American farm goods.
During the session, both contracts jumped to their highest since Sept. 17, with WTI topping $60 a barrel.
For the week, Brent was on track to rise about 1.2% and U.S. crude about 1.3%.
The 18-month trade war has pressured oil prices, while uncertainty around Brexit has also weighed. Britain's ruling Conservative Party won a large majority in Thursday's general election, paving the way for Prime Minister Boris Johnson to remove the country from the European Union.
"With a large win for Boris Johnson in the UK general election and an 'almost there' for the U.S.-China trade war, it's up we go for Brent crude," said Bjarne Schieldrop, an analyst at SEB.
"Oil demand growth will likely rebound along with a rebound in global manufacturing."
A drop in the U.S. dollar coupled with a strong pound helped boost commodities.
"Risk appetite among financial investors is now likely to remain high thanks to the deal between the U.S. and China and the forthcoming end to the Brexit cliffhanger," said Eugen Weinberg, an analyst at Commerzbank. "This will also benefit the oil price."
Brent has rallied by 21 percent in 2019, supported by efforts by the Organization of the Petroleum Exporting Countries and allies including Russia to cut production.
The alliance, known as OPEC+, agreed last week to lower supply by a further 500,000 barrels per day as of Jan. 1. They have been limiting supply since 2017.
OPEC's research indicates that the oil market in 2020 may see a small supply deficit, although the International Energy Agency sees global inventories rising despite further cuts by OPEC+.
"There has been much fear for a large first-half 2020 oil market surplus, but OPEC has now largely eradicated this threat," SEB's Schieldrop said.