LONDON: Oil prices rose to a seven-week high on Wednesday as markets assessed the outcome of US-China trade negotiations, while pessimism over US-Iran nuclear talks also provided support.
Brent crude futures were up 82 cents, or 1.2 percent, to $67.69 a barrel at 1:28 p.m. Saudi time, while US West Texas Intermediate crude was up 96 cents, or 1.5 percent, to $65.94.
US and Chinese officials agreed on a framework to put their trade truce back on track and resolve China’s export restrictions on rare earth minerals and magnets, US Commerce Secretary Howard Lutnick said on Tuesday at the conclusion of two days of intense negotiations in London.
The two countries are the world’s largest economies and oil consumers.
Trade-related downside risk in oil has been temporarily removed, although the market reaction has been tepid as it is not clear how economic growth and global oil demand will be affected, said PVM analyst Tamas Varga.
Meanwhile, US President Donald Trump said he was less confident that Iran would agree to stop uranium enrichment in a nuclear deal with Washington, according to an interview released on Wednesday.
For its part, Iran threatened to strike US bases in the Middle East if nuclear negotiations fail and conflict arises with the US.
On the supply side, OPEC+ plans to increase oil production by 411,000 barrels per day in July as it looks to unwind production cuts for a fourth straight month.
“Greater oil demand within OPEC+ economies – most notably Saudi Arabia – could offset additional supply from the group over the coming months and support oil prices,” said Capital Economics’ analyst Hamad Hussain in a note.
Later on Wednesday, markets will be focusing on the weekly US oil inventories report from the Energy Information Administration.
US crude oil stocks fell by 370,000 barrels last week, according to market sources who cited American Petroleum Institute figures on Tuesday.
