A steep selloff in US equity markets knocked crude futures off early-session highs, but optimism regarding a potential thaw in US-China trade relations and a tightening supply picture for 2019 kept prices in the black Monday. ICE May Brent settled up 60 cents at $65.67/b and NYMEX April WTI was 79 cents higher at $56.59/b.
Crude prices began trending off session highs in late-morning trading after a weaker-than-expected construction spending report sent equity markets sharply lower. December construction spending dipped 0.6% from November, according to US Commerce Department data released Monday.
The weak construction data weighed heavily on equity markets. The Dow Jones Industrial Average, which had started Monday higher, was down more than 1.3% at the close of oil trading, after having clawed back some losses that took prices down more than 2% around midday. NYMEX product futures traced crude markets Monday. April RBOB settled 1.87 cents higher at $1.7490/gal and April ULSD closed 1.33 cents higher at $2.0143/gal.
The oil complex held onto some early-session gains amid increased optimism that Washington and Beijing are close to signing a trade deal that could lift tariffs and ease tensions between the two countries. The deal would be the first sign of an end to a tit-for-tat trade war between the two nations that has added significant uncertainty to markets in recent months, weighing on economic outlooks and throwing previous demand growth estimates into doubt.