Oil prices rose early on Thursday, recouping some of Wednesday’s losses, after signs emerged that there could be some tariff and trade talks between the United States and China.
As of 9:28 a.m. EDT on Thursday, the U.S. benchmark, WTI Crude, was up by 0.95% on the day and traded at $62.86. The international benchmark, Brent Crude, traded 0.7%% higher at $66.58.
Much of the market movement in recent hours was due to remarks from Washington and Beijing, hinting at possible de-escalation in the trade war and a potential opening of tariff and trade talks between the world’s two largest economies.
Since President Donald Trump escalated the tariff war on China in early April, oil prices have dropped by about $10 per barrel amid concerns about the state of the global economy and a recession in the United States. After the Trump Administration slapped triple-digit tariffs on China, most investment banks said they consider a recession scenario as increasingly possible.
President Trump on Wednesday said that China tariffs “will come down substantially.”
China, for its part, called on Thursday for the U.S. tariffs to be canceled, but noted that Beijing hasn’t started any trade talks with the United States, despite comments from Washington that there already exists a “direct contact.”
Large U.S. product draws reported by the EIA on Wednesday also supported oil prices early on Thursday.
But the market is torn between signs of possible de-escalation in the U.S.-China trade standoff and rising OPEC+ production with Kazakhstan defying the group it is part of by saying that its oil production strategy would be governed by national interests rather than group quotas.
“Growing disagreements between OPEC+ members have oil sitting out the broader risk-on move seen across financial markets as tariff tensions ease,” ING commodities strategists Warren Patterson and Ewa Manthey said on Thursday.
By Michael Kern for Oilprice.com
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