Oil prices jumped by more than 5 percent on Monday after the US and China agreed on a 90-day truce in a trade dispute. Photo: Reuters

JOHANNESBURG – Oil prices jumped by more than 5 percent on Monday after the US and China agreed on a 90-day truce in a trade dispute. 

Canada’s Alberta province ordered a production cut, and exporter group Opec looked set to reduce supply. 

US light crude oil rose $2.92 a barrel to a high of $53.85 (R744.38), up 5.7 percent, before easing to around $53.25 by 2.20pm. Brent crude rose 5.3 percent or $3.14 to a high of $62.60 and was last trading around $62, up $2.54. 

“From Argentina to Alberta, the oil market news is about supply curtailments,” said Norbert Rucker, head of commodity research at Swiss bank Julius Baer. “A brightening market mood will likely extend today’s price rally in the very near term.” 

China and the US agreed during a weekend meeting in Argentina of the Group of 20 leading economies not to impose additional trade tariffs for at least 90 days, while they hold talks to resolve existing disputes.   

The trade war between the world’s two biggest economies has weighed heavily on global trade, sparking concerns of an economic slowdown.   

Crude oil has not been included in the list of products facing import tariffs, but traders said the positive sentiment of the truce was also driving crude markets. 

Oil also received support from an announcement by Alberta that it would force producers to cut output by 8.7 percent, or 325 000 barrels per day (bpd), to deal with a pipeline bottleneck that has led to crude building up in storage.   

Opec meets on December 6 to decide output policy. The group, along with non-Opec member Russia, is expected to announce cuts aimed at reining-in a production surplus that has pulled down crude prices by around a third since October. 

“Markets are expecting to see a substantial production cut after Russian President Vladimir Putin said his country’s co-operation on oil supplies with Saudi Arabia would continue,” said Hussein Sayed, chief market strategist at brokerage FXTM. 

Within Opec, Qatar said yesterday it would leave the producer club in January. 

Qatar’s oil production is only around 600 000 bpd, but it is the world’s biggest exporter of liquefied natural gas. 

The Gulf state has also been at loggerheads with its much bigger neighbour, Saudi Arabia, the de facto Opec leader.