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Oil prices rally on eased trade tensions

11 April, 2018, 12:37 | Author: Melinda Barton
  • An Oil Price Rally Is Likely

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014.

Brent crude oil briefly rose above $70 per barrel, but at the time of writing the price was at $69.83 a barrel, up 1.72 per cent. That was the highest finish for the most active contract since December 1, 2014, according to FactSet.

Light, sweet crude for May delivery rose $1.29, or 2%, to $64.71 a barrel on the New York Mercantile Exchange, trading at a one-week high.

"This has been another huge day", said Bill Baruch, president of Blue Line Futures in Chicago.

Crude prices rallied for the second day in a row yesterday, as appetite for riskier assets improved after a speech by Chinese President Xi Jinping eased concerns about a trade conflict between the United States and China.

The price of a Brent barrel surpassed the $70 mark in morning trading on Tuesday, after a rather rocky start to the week. Both have erased their losses from last week, when concerns over a possible trade war between the two largest economies contributed to declines of more than 4 percent. "However, fundamental support levels have been demonstrated with OPEC's suggestion on a production limit extension into 2019", said Singapore-based Phillip Futures. "We're taking a hit with the rest of the market".

Beyond the trade dispute, oil markets are also concerned about the potential of renewed US sanctions against some significant oil producers.

A trade dispute between the USA and China could lead to slower economic growth that would limit oil demand. The dollar fell against a basket of major currencies.DXY, hitting its lowest in almost two weeks.

Oil prices also traded higher Tuesday amid a report from Bloomberg News, which said that Saudi Arabian officials were seeking $80 a barrel on Brent crude to support the valuation of its energy giant, Aramco, before its initial public offering.

The American Petroleum Institute will publish storage data later today while the US Energy Information Administration releases its monthly report on US production. Analysts anticipated a decline in crude and gasoline inventories.

"China is the main importer (after Canada) of US crude oil, to the tune of about 400,000 barrels per day", Petromatrix said, Reuters reported.

Meanwhile, Saudi Arabia's Energy Ministry said it would keep exports below 7 million bpd and restore its inventories to normal levels.



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