* U.S.-Mexico-Canada trade deal passes U.S. Senate
* Oil bulls hope trade deals boost demand
* Analysts doubt China will buy $50 bln of U.S. oil supplies
* S&P 500 stock index hits record, boosting oil
* IEA expects oil production to outpace demand
(New throughout, adds comments)
By Arathy S Nair
NEW YORK, Jan 16 (Reuters) - Oil rose about 1% on Thursday,
as progress on another major trade deal fed optimism that energy
demand will grow in 2020, which offset bearish market comments
from the International Energy Agency.
The U.S. Senate approved a revamp of the U.S.-Mexico-Canada
Free Trade Agreement a day after the signing of the Phase 1
trade deal between the United States and China.
Brent LCOc1 settled up 62 cents, or 1%, to $64.62 a
barrel, while U.S. West Texas Intermediate (WTI) crude CLc1
rose by 71 cents, or 1.2%, to $58.52 a barrel.
The deal that the Senate approved was a revamp of the
26-year-old North American Free Trade Agreement. A
day earlier, U.S. and Chinese leaders signed the Phase 1 trade
deal calling for the world's largest energy importer to buy $50
billion more of U.S. oil, liquefied natural gas and other energy
products over two years.
However, analysts warned that China might struggle to meet
the target and said oil prices could be volatile until more
details emerge. Trade sources said sharply higher Chinese purchases of U.S.
energy products as part of the China-U.S. trade deal will shake
up global crude oil trade flows if American supplies squeeze
rival crudes out of the top oil import market. "We had the U.S-China trade deal yesterday - signed and
sealed. And now you got the U.S.-Mexico trade going through the
senate. So I think the optimism surrounding the demand is rising
exponentially right now," said Phil Flynn, an analyst at Price
Futures Group in Chicago.
The oil benchmark prices were also supported by a report
from the Federal Reserve Bank of Philadelphia showing strong
manufacturing activity in the U.S. Mid-Atlantic region and as
Wall Street stock indexes scaled new records. The S&P 500 .SPX
touched a record high. Price gains were capped earlier as the International Energy
Agency (IEA) said it expected oil production to outpace demand
for crude from the Organization of the Petroleum Exporting
Countries (OPEC), even if members comply fully with a pact with
Russia and other non-OPEC allies to curb output. However, Flynn believes the agency may be underestimating
the potential demand boost from the U.S.-Mexico trade accord
and the U.S. China trade deal.
UBS said in a note "provided Middle East tensions do not
intensify and cause production disruptions, Brent should decline
toward the bottom of a $60–65 per barrel trading range in 1H20
before recovering to the top of it in the second half of the
year".
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