Oil rises amid hopes for a breakthrough in US-China trade talks
8 May 08:56
Oil prices rose on Thursday after falling by more than $1 during the previous session. The market was supported by expectations of a breakthrough in the upcoming trade talks between the US and China, the world’s two largest oil consumers. This was reported by "Komersant Ukrainian" with reference to Reuters.
Futures for Brent crude oil rose 51 cents, or 0.8%, to $61.63 per barrel, while US West Texas Intermediate rose 57 cents, or 1%, to $58.64 per barrel as of 06:20 Kyiv time.
“Optimism about this weekend’s US-China trade talks is the main factor supporting the oil market recovery. Signs of de-escalation of the trade war have improved market sentiment, causing oil prices to recover in the oversold market,”
– said Tina Teng, an independent market analyst.
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The United States and China
U.S. Treasury Secretary Scott Bessent will meet with China’s top economic official on May 10 in Switzerland to hold talks on the trade war that is destabilizing the global economy. The two countries are the world’s two largest economies, and the disruption caused by their trade dispute is likely to reduce oil consumption growth.
On Wednesday, US President Donald Trump hinted that China initiated the trade talks, adding that he was not ready to reduce US tariffs on Chinese goods to attract Beijing to the negotiations. Bessent noted that the upcoming talks are just the beginning, not “advanced” discussions.
The situation in the United States
Concerns about weak demand limited the rise in oil prices after the Federal Reserve left interest rates unchanged but warned of rising economic uncertainty.
“The Fed signaled that rates are likely to remain unchanged until the impact of tariffs becomes clearer. This strengthened the US dollar, which put additional pressure on broader commodity markets,”
– ING analysts said in a Thursday report.
A stronger U.S. currency makes oil traded in dollars more expensive for holders of other currencies, which leads to lower demand.
Adding to fears of weaker demand, US gasoline stockpiles rose last week, raising concerns among analysts that consumption is not growing, even though the US is entering the summer demand period that will begin later this month.
At the same time, OPEC will increase oil production, which will put additional pressure on prices.
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