Crude oil prices moved lower earlier today even after the latest round of talks between the United States and China on trade yielded positive results, as traders adopted a wary stance on the news.
At the time of writing, Brent crude was trading at $66.82 per barrel and West Texas Intermediate was changing hands for $65 per barrel, after U.S. and Chinese government officials said they had agreed on easing export restrictions and devising a framework for the resolution of their trade conflict.
“We have reached a framework to implement the Geneva consensus and the call between the two presidents,” U.S. Commerce Secretary Howard Lutnick said, as quoted by Reuters. “The idea is we’re going to go back and speak to President Trump and make sure he approves it. They’re going to go back and speak to President Xi and make sure he approves it, and if that is approved, we will then implement the framework.”
It was perhaps the fact that the two presidents had yet to sign off on the framework that kept oil traders wary, even though oil prices are trending higher than last week.
“In terms of what it means for crude oil, I think it removes some downside risks, particularly to the Chinese economy and steadies the ship for the U.S. economy – both of which should be supportive for crude oil demand and the price,” IG analyst Tony Sycamore told Reuters.
Meanwhile, the European Union said it was discussing a ban on the currently non-operating Nord Stream pipeline and a lower price cap on Russian crude as part of its next package of sanctions against Moscow—the 18th in a row.
In potentially bearish news for oil, the World Bank lowered its global growth forecast for the year to 2.3% from 2.7%, saying the global economy is set for its weakest year since 2008.
By Irina Slav for Oilprice.com
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