TOKYO: Oil prices rose more than $2 in Asian trading on Monday after the US and China said they would ease some of their tariff measures, lifting market sentiment that the world's two largest crude users may be moving toward resolving their trade dispute.
Brent crude futures climbed $2.11, or 3.3 percent, to $64.14 a barrel by 10:14 a.m. Saudi time. US West Texas Intermediate crude futures were trading at $63.14 a barrel, up $2.12, or 3.47 percent, from Friday’s close.
Both sides said on Monday they would suspend 24 percent of additional ad valorem tariffs on goods from the other country for an initial period of 90 days, in a joint statement following trade talks in Geneva over the weekend.
Both benchmarks rose more than $1 on Friday and gained over 4 percent 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 had 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.”
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.
Toshitaka Tazawa, an analyst at Fujitomi Securities, said that OPEC’s plan to raise output capped gains.
Tazawa was referring to plans by the Organization 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 program 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.
