Oil market gets slight boost from North American trade

Aug. 28 (UPI) -- Tepid enthusiasm over a U.S.-Mexican trade proposal made for a modest rally in crude oil prices ahead of the opening bell in New York on Tuesday.

U.S. President Donald Trump lauded a trade proposal with Mexico as a landmark deal that supports his pledge to modernize the North American Free Trade Agreement. The proposal, however, needs to pass congressional approval before Mexican President Enrique Peña Nieto leaves office in October.

"What's not for the world's optimists to like?" John Hardy, the head of Forex strategy at Danish investment firm Saxo Bank, asked in a statement. "Quite a number of things, really, but for the moment the ugly background music of Brexit, China's economic landing, European existential woes, and emerging market hotspots is being drowned out by the latest developments, and we'll be the last to advocate standing in front of a charging freight train."

Crude oil prices were only slightly higher despite the break in North American trade tensions. Canada, the largest crude oil exporter to the United States, was left out of the U.S.-Mexican negotiations.

The price for Brent crude oil was up 0.76 percent as of 9:21 a.m. EDT to $77.08 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.12 percent to $68.95 per barrel.

U.S. energy trade groups praised the deal, but said it lacked specifics. The United States is a natural gas exporter to Mexico, though U.S. tariffs on steel and aluminum could make future cross-border projects more expensive.

On more fundamental issues, a survey of analysts from S&P Global Platts revealed uncertainty for U.S. crude oil inventories, a loose gauge of broad-based demand. The commodity pricing group reported that some of its respondents were anticipating a drain of 3 million barrels or more, while others were expecting a bit of an increase.

The American Petroleum Institute publishes its data after the close of trading on Tuesday. A large draw would put a tailwind behind the price of oil.

Elsewhere, the Organization of Economic Cooperation and Development reported real gross domestic product for the world's major industrialized economies grew 0.6 percent in the second quarter, compared to 0.5 percent during first quarter 2018.

"Year-on-year GDP growth for the OECD area continued to slow marginally, to 2.5 percent in the second quarter of 2018, compared with 2.6 percent in the previous quarter," its report read.