UPDATE 7-Oil rises 1% on Trump's optimism for a deal with China

* Trump tweets 'Getting VERY close to a BIG DEAL with China'
* Oil market oversupply set to stay despite OPEC+ pact -IEA
* OPEC sees small 2020 oil deficit even before latest supply
cut

(Updates prices, market activity, adds commentary; changes
byline, dateline, previous LONDON)
By Stephanie Kelly
NEW YORK, Dec 12 (Reuters) - Oil prices rose about 1% on
Thursday after U.S. President Donald Trump said Washington was
"very close" to nailing down a trade deal with China.
Brent crude LCOc1 futures rose 55 cents to $64.27 a barrel
by 11:23 a.m. EST (1623 GMT). West Texas Intermediate (WTI)
crude CLc1 futures rose 44 cents to $59.20 a barrel.
Oil prices received a fresh boost after Trump's tweet saying
the United States was "very close to a big deal with China" amid
reports that the country was considering a delay or possible
cancellation of tariffs scheduled to go into effect on Dec. 15.
While prices received a fresh boost immediately following
the tweet, futures eased somewhat during the session.
"It's tough to draw a firm conclusion from the latest that
came out," said Gene McGillian, vice president of market
research at Tradition Energy in Stamford, Connecticut. "It seems
to be close, but we've all been waiting for this deal to
happen."
The outlook for oil demand has been clouded by U.S.-China
trade tensions and uncertainty over whether a fresh round of
U.S. tariffs on Chinese goods would come into effect.
Trump was expected to meet with his top trade advisers on
Thursday to discuss the Dec. 15 tariff deadline, sources told
Reuters. China's commerce ministry said Beijing and Washington were
in close communication, declining to comment on possible
retaliatory steps if Trump imposes the extra tariffs.
Oil prices have firmed after OPEC and other producers
including Russia agreed last week to rein in output by an extra
500,000 barrels per day in the first quarter of 2020.
The Organization of the Petroleum Exporting Countries said
this week that it now expected a small oil market deficit in the
next year, suggesting the market is tighter than previously
thought. By contrast, the International Energy Agency (IEA) predicted
a sharp rise in global inventories despite the OPEC agreement,
noting expectations for lower output by the United States and
other non-OPEC countries.
Oil prices were also supported by the U.S. Federal Reserve
keeping interest rates unchanged at a meeting on Wednesday.
The European Central Bank also kept its ultra-easy monetary
policy unchanged on Thursday, even keeping the door open to more
stimulus. "While oil prices are trending higher benefiting from a
dovish Fed, a weaker U.S. dollar, the IEA reiterates that
despite the deeper oil production cuts, the oil market is likely
to be oversupplied in 1H20," said UBS oil analyst Giovanni
Staunovo.

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GRAPHIC: U.S. petroleum inventories https://tmsnrt.rs/35Hre4S
CHART: Brent oil may revisit Dec 11 low of $63.01
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