Oil up Almost 3% on Upbeat U.S. Jobs, Trade Talks

Investing.com - Oil prices surged almost 3% on Friday on stellar U.S. jobs growth for October and a report that China has reached a consensus with the White House on core concerns in their trade war.

The rally came despite suggestions by some analysts that increases in production from the U.S. and OPEC may have offset the upside potential for oil prices.

West Texas Intermediate, the benchmark for New York-traded crude, settled up $2.02, or 3.7%, at $56.20 per barrel.

Brent, the London-traded global gauge for oil, closed the regular U.S. trading session up $2.07, or 3.5%, at $61.69.

U.S. nonfarm payrolls rose by 128,000, compared with expectations for a rise of 89,000 according to forecasts compiled by Investing.com. September's hiring was revised up to 180,000 from an initially-reported 136,000.

Wall Street's S&P 500 hit record highs on the jobs report, adding to the bullish fervor across markets, including oil.

The rally was heightened by media reports out of Beijing that China had reached consensus with the U.S. in principle on issues related to a trade deal the two sides were negotiating.

China's Vice Premier Liu He had a phone call with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Friday where the two sides conducted “serious and constructive” discussions on “core” trade points. They also talked about arrangements on the next consultation, CNBC said in a Beijing-datelined report.

"I guess the fact that the announcement came out of China has given the story more credibility than it might have had it been a White House announcement,” said John Kilduff, founding partner at New Yorks energy hedge fund Again Capital.

“But a 3% rally, if you ask me, seems a little generous under the circumstances, even with the jobs numbers we’ve had,” he added. “So, it’s very likely that we’ll give back some of these on Monday as the US-China deal is not a done deal yet, regardless what both sides want you to believe.”

U.S. oil production surged by almost 600,000 barrels per day (bpd) in August, government data published Thursday showed, hitting a record of 12.4 million. The increase was largely due to a 30% surge in Gulf of Mexico output.

Meanwhile, a Reuters survey on OPEC production showed production rose by 690,000 bpd in October. That brought the Middle East-dominated group’s total supply back up to 29.59 million bpd.

“This latest ramp up in OPEC and U.S. supply extinguished any remaining pockets of upside potential,” Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note published Friday.

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