Oil prices rose on Tuesday after U.S. President Donald Trump predicted a trade deal with China following positive comments by Beijing, calming concerns raised by an earlier round of tit-for-tat tariff hikes.
Brent crude LCOc1 was up 39 cents, or 0.7 per cent, at $59.09 a barrel by 1220 GMT, after falling one per cent in the previous session.
Tuesday’s slide was the third daily decline in a row.
U.S. West Texas Intermediate crude futures CLc1 were up 57 cents, or 1.1 per cent, at $54.21, after a one per cent fall on Monday and heading for a fourth daily decline.
Trump said he believed China was sincere about wanting to reach a deal, while Chinese Vice-Premier, Liu He, said China was willing to resolve the dispute through “calm” negotiations, settling global markets.
“While ‘de-escalation’ and the expectation of a temporary truce in the trade war may be what is lifting sentiment and oil prices this morning, the resolution of the U.S.-China trade rift will take time,’’ Harry Tchilinguirian, global oil strategist at BNP Paribas in London, said.
“Oil prices appear to be getting a reprieve from the past week’s U.S. and Chinese announcements of retaliatory trade measures.’’
Oil prices have fallen by about 20 per cent from 2019 highs reached in April, partly because of worries that the U.S.-China trade war is hurting the global economy, which could dent demand for oil.
China’s Commerce Ministry said last week it would impose additional tariffs of five per cent or 10 per cent on 5,078 products originating from the U.S., including crude oil, agricultural products and small aircraft.
In retaliation, Trump said he was ordering U.S. companies to look at ways to close operations in China and make products in the U.S.
“A relative sense of calm has been restored, but it is simply impossible to know how long it will last,’’ said Tamas Varga of oil broker, PVM.
“Any market optimism will only prevail when the ink has dried on a new U.S.-China trade agreement.’’
The measures are prompting reactions from Chinese companies, with Sinopec, seeking a tariff exemption for importing U.S. oil in the coming months, sources told Reuters.
