[NEW YORK] Oil prices settled nearly 2 per cent higher on Friday and notched their first weekly gains since mid-April as a US trade deal with the United Kingdom turned investors optimistic ahead of talks between top officials from Washington and Beijing.
Brent crude futures rose US$1.07, or 1.7 per cent, to settle at US$63.91 a barrel, while US West Texas Intermediate crude futures advanced US$1.11, or about 1.9 per cent, to settle at US$61.02.
Week-over-week, both benchmarks gained over 4 per cent.
US President Donald Trump on Friday said China should open its market to the US, and that an 80 per cent tariff on Chinese goods “seems right,” a day after he announced a deal lowering tariffs on British car and steel exports, among other agreements with the United Kingdom.
“Energy markets – as bearish as they’ve been – are finally shaking off some of the pessimism and catching the broader market optimism that’s showing back up as progress on trade relationships has begun,” said Alex Hodes, oil analyst at brokerage StoneX.
The UK agreement and Trump’s comments on China have raised hopes for similar deals between Washington and Beijing. US Treasury Secretary Scott Bessent was to meet with China’s top economic official Vice-Premier He Lifeng in Switzerland on May 10.
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Current US tariffs on Chinese imports stand at 145 per cent.
“While prohibitively high, you can’t knock the math … 80 per cent is substantially less than 145 per cent,” Hodes wrote to clients.
Chinese exports rose faster than expected in April while imports narrowed their decline, customs data showed on Friday, giving Beijing some relief ahead of the talks.
Uncertain outlook
Rising hostilities in the Middle East also boosted oil prices this week, Nikos Tzabouras, senior market analyst at trading platform Tradu, said.
Israel’s military said it had intercepted a missile launched from Yemen towards its territory, days after Oman mediated a ceasefire between the US and Yemen’s Houthis, who claimed responsibility for Friday’s attack.
Still, the outlook for oil prices remains uncertain and will largely depend on the trajectory of the US economy, its trading policies and the enforcement of sanctions on Iran and Russia, said Marcus McGregor, head of commodities research for asset management firm Conning.
On Thursday, the US imposed sanctions on a third Chinese independent oil refinery for purchases of Iranian crude, ahead of a fourth round of nuclear talks in Oman this weekend.
Keeping a ceiling to oil price gains this week was the planned increase to oil output by the Organization of the Petroleum Exporting Countries and its allies, known collectively as Opec+.
However, a Reuters survey found that Opec oil output edged lower in April as production declines in Libya, Venezuela and Iraq outweighed a scheduled increase in output.
The survey was just enough to add an extra glimmer to markets already hopeful ahead of the US-China trade talks, PVM analyst John Evans wrote to clients on Friday. REUTERS
