Oil prices hold gains ahead of US-China trade talks
BEIJING, June 9 (Reuters) - Oil prices held on to last week's gains early on Monday as investors waited for U.S.-China trade talks to be held in London later in the day.
Brent crude futures were flat at $66.47 a barrel at 0008 GMT. U.S. West Texas Intermediate crude was trading up 1 cent at $64.59.
The prospect of a U.S.-China trade deal supported prices as three of Donald Trump's top aides were set to meet with counterparts in London on Monday for the first meeting of the U.S.-China economic and trade consultation mechanism.
The announcement on Saturday followed a rare Thursday call between the two countries' top leaders, with both under pressure to dial down tensions as China's export controls on rare earths disrupt global supply chains. Oil prices posted their first weekly gain in three weeks on the news.
A U.S. jobs report showing unemployment held steady in May appeared to increase the odds of a Federal Reserve interest rate cut, further supporting last week's gains. Inflation data from China on Monday morning will give a reading of domestic demand in the world's largest crude importer.
The economic data and the prospect of a trade deal that could support economic growth and increase demand for oil outweighed worries about increased OPEC+ supply after the group announced another big output hike for July on May 31.
HSBC expects OPEC+ to accelerate supply hikes in August and September, which are likely to raise downside risks to the bank's $65 per barrel Brent forecast from the fourth quarter of 2025, according to a research note on Friday.
Capital Economics researchers said they believe this "new faster pace of (OPEC+) production rises is here to stay".
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
20 minutes ago
- Reuters
US aluminium tariffs threaten scrap clash with European Union
LONDON, June 9 (Reuters) - U.S. President Donald Trump's move to double tariffs on aluminium imports heightens the risk of a full-blown scrap war with the European Union. Although they are supposed to be blanket tariffs with no exceptions or exemptions, there is one significant gap in the tariff wall. Aluminium scrap is explicitly excluded on the grounds it constitutes a key raw material for U.S. manufacturers. The Trump administration's decision to lift aluminium tariffs to 25% effective the start of March has already caused U.S. imports of recyclable material to rise. This week's doubling of the tariff rate to 50% could turn the import flow into a flood. The European Union, which is mulling export duties on aluminium recyclables to stop what it terms "scrap leakage", is coming under pressure to move sooner rather than later. The U.S. Midwest aluminium premium has rocketed to a record $1,325 per metric ton after Wednesday's doubling-down on import tariffs. That's the price U.S. buyers will pay over and above the international price traded on the London Metal Exchange (LME), currently $2,430 per ton for cash metal. What once reflected the cost of transport to get metal to the U.S. Midwest manufacturing hub is now a tariff premium, capturing the fracture of the global aluminium pricing structure. U.S. consumers of aluminium goods will ultimately foot the bill but mid-stream processors are likely to do well. Fabricators converting raw metal to semi-finished goods such as can sheet were the prime beneficiaries of the first Trump administration's 10% tariffs, according to a report by consultancy Harbor Aluminum commissioned by the Beer Institute. Mid-stream processors passed on the tariff, even if the raw material was domestically sourced scrap, Harbor found. The new tariffs will incentivise fabricators not only to maximise their domestic purchases of scrap but to tap overseas markets, where U.S. buyers can now outbid just about anyone else for available material. U.S. imports of aluminium recyclable materials jumped to over 80,000 tons in March, the highest monthly volume since 2022. There were sharp increases in supply from Canada and Mexico, the two largest and nearest suppliers to the U.S. market. However, the tariff differential has started to draw material out of Europe, according to the European Aluminium association. Exports from EU countries to the United States spiked in the first quarter of the year, it said. They are only going to accelerate as the transatlantic price gap widens after this week's doubling of tariffs. The EU is facing a "full-blown scrap crisis", according to the association. Director General Paul Voss called on the European Commission to immediately impose a corresponding duty on scrap exports to the United States. The Commission has already identified high aluminium scrap exports as a key hurdle in its ambition to meet the bloc's "Circular Economy" targets. A March "Action Plan", opens new tab for both the aluminium and steel sectors promised a decision by the third quarter of this year on suitable trade measures, including reciprocal export tariffs on countries "that apply unfair subsidies" to their recycling industries. There's now a sense of urgency that some sort of defensive trade barrier will be required to stem export flows. Aluminium scrap is a highly globalised marketplace but that looks set to change as Europe figures out how to stop the loss of raw material to the United States. Caught in the middle of this tug-of-war is China, the world's largest aluminium scrap buyer. The country has imported 1.8 million tons in each of the last two years and although it sources much of its material from Asia, it is a significant buyer of both U.S. and European end-of-life scrap. Beijing last year relaxed the purity rules on imports of both copper and aluminium scrap to encourage greater domestic recycling. This is particularly important for China's aluminium sector, where production of primary metal is now close to the government's mandated capacity cap, meaning supply growth will have to come from recycling. Chinese buyers are facing the twin challenge of export restrictions in Europe and competition with U.S. players in their own Asian supply chain. The scrap wars have only just begun. The opinions expressed here are those of the author, a columnist for Reuters. Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, opens new tab and X, opens new tab.
Reuters
20 minutes ago
- Reuters
South African rand stable ahead of US-China trade talks
JOHANNESBURG, June 9 (Reuters) - The South African rand was steady in early trade on Monday, as markets awaited pivotal U.S.-China trade talks set to take place later in the day that could ease tensions between the two nations. At 0621 GMT the rand traded at 17.7450 against the dollar , near Friday's closing level. Three top aides of U.S. President Donald Trump will meet with their Chinese counterparts in London later in the day to discuss the trade dispute between the two countries, a standoff that has kept global markets on edge. Like other risk-sensitive currencies, the rand often takes cues from global drivers like U.S. policy and economic data in addition to local factors. Domestic investors this week will look to manufacturing (ZAMAN=ECI), opens new tab and mining (ZAMNG=ECI), opens new tab data to gauge the health of Africa's most industrialised economy. Attention remains on the country's long-delayed budget after Finance Minister Enoch Godongwana, in his third attempt at passing it, made only minor adjustments to spending plans and deficit projections. On Wednesday the National Assembly is expected to debate the revised fiscal framework adopted by a key parliamentary committee last week. South Africa's benchmark 2035 government bond was also flat in early deals, with the yield at 10.075%.
Reuters
26 minutes ago
- Reuters
India central bank's large rate cut squeezes forward premiums, leaves rupee vulnerable, analysts say
MUMBAI, June 9 (Reuters) - The Reserve Bank of India's surprise outsized rate cut last week will leave the rupee vulnerable to further depreciation by pressuring already depressed foreign exchange forward premiums, several analysts said on Monday. The rupee has underperformed its Asian peers in 2025 amid weak capital flows. A narrowing interest rate differential — with the U.S. Federal Reserve moving slower than the RBI in cutting rates — suggests the Indian currency may continue to lag. The 1-month U.S. dollar/rupee forward premium — typically more sensitive to liquidity conditions — fell to 7.5 paisa, its lowest level since November. Meanwhile, the 1-year premium , which is more responsive to rate differential between the U.S. and India, declined to 1.5250 rupees, marking its lowest level in nearly a year. GRAPHIC: A drop in dollar/rupee forward premiums makes the rupee less attractive for carry trades, and diminishes the incentive for exporters to hedge future receivables. At the same time, it raises the likelihood that importers—who typically hedge near-term payment obligations—will step up their hedging activity. The decline in premiums - a less favourable rate differential between the U.S. and India - could leave the rupee open to sharper depreciation. Against the backdrop of benign inflation and the need to support growth, the Reserve Bank of India last Friday delivered a larger-than-expected 50 basis point rate (bps) cut, exceeding the 25 bps anticipated by economists. In a further easing move, the central bank slashed the cash reserve ratio for banks. "One thing the rupee had going for it is that it offered attractive carry ... with the 50-bps rate cut from the RBI, carry attraction has been reduced," Mitul Kotecha, head of FX and EM macro strategy Asia at Barclays, adding that in an environment where investors are again focussed on carry, the rupee's appeal has been diminished. Falling premiums can be a "mild added headwind" for the rupee amid globally elevated yields, Dhiraj Nim, FX strategist at ANZ Research, said, and pointed out that if India growth data weaken, there could be scope for one more rate cut.
