Futures in New York added as much as 0.7% Friday after climbing by that amount Thursday.
The phase-one agreement averts new US tariffs that were set to be introduced Dec 15 and includes a promise by China to buy more American agricultural goods, according to people familiar with the matter.
The terms have been agreed but the legal text hasn’t been finalised, the people said.
Crude is poised to eke out a small gain this week due to the positive sentiment around the trade deal after surging by more than 7% the week before as OPEC and its allies agreed to deeper-than-expected production cuts.
It remains to be seen to what extent the deal between the US and China will roll back existing tariffs, which will be crucial for reviving oil demand.
“While the current trade deal will most probably limit demand devastation, it might not be enough to counter an oversupplied market in early 2020,” Stephen Innes, chief Asia market strategist at AxiTrader, said in a note.
“That’s possibly why we are not seeing a massive bounce in oil prices now commensurate with the frothy risk-on environment,” he said.
West Texas Intermediate for January delivery rose 31 cents, or 0.5%, to US$59.49 a barrel on the New York Mercantile Exchange as of 10.51am in Singapore.
The contract, which traded as much as 1.6% higher on Thursday, is up 0.5% so far this week.
Brent for February settlement added 0.7% to US$64.63 a barrel on the London-based ICE Futures Europe Exchange.
It’s up 0.4% for the week. The global benchmark crude traded at a US$5.25 premium to WTI for the same month.
Asian stocks and agricultural commodities like soybeans and corn were up more than 1% Friday on news of the partial trade deal.
Discussions are now focused on rolling back the existing tariffs that have been built up over the 20-month conflict by as much as half.
Officials have also said a phase-one agreement would include Chinese commitments to do more to stop intellectual property theft.
Put off for later discussions are knotty issues such as longstanding US complaints over the vast web of subsidies ranging from cheap electricity to low-cost loans that China has used to build its industrial might.
Oil prices will likely remain volatile as this is only a partial deal and there will need to be more negotiations for a comprehensive agreement, said Kim Kwangrae, a commodities analyst at Samsung Futures Inc in Seoul.