Singapore — Oil prices rose on Monday after hitting five-month lows in the previous session, as investors hoped potential talks between the presidents of the US and China could ease trade tension between the world’s two largest economies and oil consumers.
Brent crude futures climbed 92c, or 1.47%, to $63.65 a barrel by 4.08am GMT after settling down 3.82% on Friday to the lowest since May 7.
US West Texas Intermediate crude (WTI) was at $59.79 a barrel, up 89c, or 1.51%, following a 4.24% loss to reach its lowest since May 7. WTI prices will settle on Tuesday as Monday is a public holiday in the US
“The rebound in oil markets has likely been caused by profit-taking as traders bet on the so-called ‘Taco’ [Trump always chickens out] trade after [US President Donald] Trump and vice-president JD Vance signalled that the newly announced tariffs were more of a negotiation tool, and they were open to making a deal with China,” independent analyst Tina Teng said.
“However, [price] volatilities are expected. I do not expect oil or any other risk assets to reverse the losses so soon,” she said.
US-China trade tension flared up last week after China expanded its rare earth export controls and drew a response from Trump on Friday to impose 100% tariffs on China’s US-bound exports, along with new export controls on “any and all critical software” by November 1.
The moves come ahead of a potential Trump-Xi meeting on the sidelines of the Asia-Pacific Economic Co-operation forum in South Korea, which US trade representative Jamison Greer said could still happen later this month.
“The most likely scenario seems to be that both sides pull back on the most aggressive policies and that talks lead to a further — and possibly indefinite — extension of the tariff escalation pause reached in May,” Goldman Sachs analysts said in a note.
However, there was still the risk of trade tension escalating, and possibly leading to higher tariffs or more serious export restrictions, at least temporarily, they added.
Oil prices tumbled in March and April during the height of trade tension between the two countries.
China’s crude imports in September rose 3.9% from a year earlier to 11.5-million barrels a day, customs data showed, as refineries operated at their highest utilisation rates so far this year and as stockpiling efforts continued.
In the Middle East, Trump declared on Sunday that the Gaza war had ended as he headed to Israel ahead of the expected release of Israeli hostages and Palestinian prisoners as part of the fragile ceasefire he brokered.
Reuters
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