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Oil rises as US-China comments soothe markets
OIL prices rose on Tuesday after US President Donald Trump predicted a trade deal with China after positive comments by Beijing, calming nerves after a round of tit-for-tat tariff hikes had sent markets reeling.
Brent crude was up by 25 cents, or 0.4 per cent, at US$58.95 a barrel on Tuesday, after falling one per cent in the previous session, dropping for a third day in a row.
US crude was up by 30 cents or 0.6 per cent at US$53.94 a barrel, having also dropped one per cent on Monday for a fourth day of declines.
Mr Trump on Monday said he believed China was sincere about wanting to reach a deal, while Chinese Vice Premier Liu He said China was willing to resolve the dispute through "calm" negotiations, settling global markets.
"For now, the street is in thrall of the President's comments, with financial markets doing abrupt changes of direction on his words that wouldn't look out of place in a Fast and the Furious film," said Jeffrey Halley, senior market analyst at OANDA.
Oil prices have fallen around 20 per cent from a 2019 high reached in April, in part because of worries that the US-China trade conflict is hurting the global economy, which could dent demand for oil. China's Commerce Ministry said last week it would impose additional tariffs of 5 per cent or 10 per cent on a total of 5,078 products originating from the United States, including crude oil, agricultural products and small aircraft.
In retaliation, Mr Trump said he was ordering US companies to look at ways to close operations in China and make products in the US.
"Unless you believe a trade deal will happen, the slowdown in the global economy continues... and earnings all over the globe will be under pressure," said Greg McKenna, strategist at McKenna Macro.
The measures are prompting reactions from Chinese companies, with Sinopec seeking a tariff exemption for importing US oil in the coming months, sources told Reuters.
Meanwhile, US crude oil and gasoline inventories likely fell last week, while distillate stockpiles rose, a preliminary Reuters poll showed on Monday. Five analysts polled by Reuters estimated, on average, that crude inventories fell 2.1 million barrels in the week to Aug 23. REUTERS