Oil Steady In Negative Area Ahead Of New Round Of U.S.-China Trade Talks
Oil prices steadied after a weekly surge as a new round of U.S.-China trade talks offered the potential to ease global tensions.
Brent traded above $66 a barrel after jumping 4% last week, while West Texas Intermediate neared $64. Negotiators from the U.S. and China are due to hold talks in London on Monday, raising the possibility that the world’s two largest economies could make progress in a dispute that has roiled markets this year.
Crude has fallen 11% in London this year on concerns that rising trade tensions could hurt global growth, crimping energy demand. At the same time, the OPEC+ alliance has been increasing output at a faster-than-anticipated pace, raising concerns that there will be a glut in the second half that will weigh on prices.
While oil has been dragged lower during President Donald Trump’s second term, price swings have eased since mid-May as traders weigh signs of progress in trade talks, rising consumption during the northern hemisphere’s summer driving season and geopolitical risks in Iran and Russia. “If the UK meeting continues to signal optimism, it could weaken the negative economic impact of the trade war,” said Gao Mingyu, Beijing-based chief energy analyst at SDIC Essence Futures Co.
“After the short-term bearish impact of the OPEC+ output hike in July was digested, improving macro sentiment, stronger seasonal demand and lingering geopolitical risks have all provided support,” he added. Brent futures have traded in a range of less than $4 since mid-May, with a measure of volatility near its lowest since early April. Meanwhile, Brent’s prompt spread — the difference between its two nearest contracts — has widened in backwardation in recent weeks, a bullish pattern.
Source: Bloomberg
