NEW YORK: Oil prices settled nearly 2 per cent higher on Friday, marking their first weekly gains since mid-April, as optimism around US-China trade talks buoyed investor sentiment. This follows a US trade agreement with the United Kingdom, which has fuelled hopes of further progress in global trade relations.
Brent crude futures rose by $1.07, or 1.7 per cent, to close at $63.91 a barrel, while US West Texas Intermediate (WTI) crude futures advanced by $1.11, or about 1.9 per cent, to settle at $61.02. Week-on-week, both benchmarks gained over 4 per cent.
On Friday, US President Donald Trump called for China to open its market to American goods, suggesting that an 80-per cent tariff on Chinese imports "seems right" – a day after he announced a deal reducing tariffs on British car and steel exports, among other agreements with the UK.
“Energy markets – as bearish as they have been – are finally shaking off some of the pessimism, catching the broader market optimism as progress on trade relationships begins to emerge,” said Alex Hodes, oil analyst at brokerage StoneX.
The UK agreement and Trump's remarks on China have sparked hopes for similar breakthroughs between Washington and Beijing. US Treasury Secretary Scott Bessent is set to meet China's top economic official, Vice Premier He Lifeng, in Switzerland on 10 May.
Current US tariffs on Chinese imports stand at 145 per cent.
“While prohibitively high, you can't ignore the maths... 80 per cent is substantially less than 145 per cent,” Hodes noted in a message to clients.
Chinese exports grew faster than expected in April, while imports narrowed their decline, according to customs data released on Friday, providing Beijing with a slight boost ahead of the trade talks.
However, the outlook for oil prices remains uncertain, hinging on the trajectory of the US economy, trade policies and the enforcement of sanctions on Iran and Russia, said Marcus McGregor, head of commodities research at asset management firm Conning.
Adding to the uncertainty, Opec and its allies, known as Opec+, plan to increase oil production. However, a Reuters survey found that Opec’s overall output dipped in April as declines in Libya, Venezuela and Iraq outweighed scheduled increases.
This modest dip in production provided a slight lift to markets already hopeful ahead of the US-China trade talks, PVM analyst John Evans noted in a message to clients on Friday. — Reuters
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