Oil prices rose on Monday following reports about progress in the US-China trade talks over the weekend.
The news that the world’s two largest crude users may be moving toward a resolution of their trade dispute lifted market sentiment, traders said.
Brent crude futures climbed 43 cents, or 0.67 per cent, to $64.34 a barrel, while the US West Texas Intermediate (WTI) crude futures were trading at $61.50 a barrel, up 0.79 per cent from Friday’s close, Reuters reported.
Both benchmarks rose more than $1 on Friday and gained over 4 per cent last week for their first weekly gains since mid-April, after a US trade deal with Britain swelled investors’ optimism that economic disruptions from US tariffs on trading partners may be avoided.
The US and China reportedly ended trade talks on a positive note on Sunday, with US officials touting a “deal” to reduce the US trade deficit, while Chinese officials said both had reached “important consensus”.
However, neither side released any details of the talks with Chinese Vice Premier He Lifeng, saying a joint statement would be issued on Monday.
Positive talks between the world’s two largest economies could help boost crude demand as trade, currently disrupted by massive tariffs levied by both countries, is restored between them.
“Optimism over constructive US-China talks supported sentiment, but limited details and OPEC’s plan to raise output capped gains,” the Reuters report quoted Toshitaka Tazawa, an analyst at Fujitomi Securities, as saying.
Tazawa was referring to plans by the Organisation of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, to accelerate output hikes in May and June that will add more crude to the market.
However, a Reuters survey found that OPEC oil output edged lower in April.
Additionally, talks between Iranian and US negotiators to resolve disputes over Tehran’s nuclear programme ended in Oman on Sunday with further negotiations planned, officials said, as Tehran publicly insisted on continuing its uranium enrichment.
A US-Iran nuclear deal could alleviate concerns about lower global oil supply, which could also pressure oil prices.
Last week, US energy firms cut the number of oil and natural gas rigs operating to their lowest since January, energy services firm Baker Hughes said on Friday.
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