Oil prices hold gains ahead of US-China trade talks
[BEIJING] Oil prices held on to last week's gains early on Monday (Jun 9) as investors waited for US-China trade talks to be held in London later in the day.
Brent crude futures were flat at US$66.47 a barrel at 0008 GMT. US West Texas Intermediate crude was trading up one cent at US$64.59.
The prospect of a US-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 US-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 US 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 Organization of the Petroleum Exporting Countries and its allies (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 US$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'. REUTERS
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CNA
13 minutes ago
- CNA
Can the US-China agreement to restore trade truce ease long-standing tensions?
Trade relations between the United States and China remain fluid, even as the world's two biggest economies have agreed on a framework aimed at reducing friction and reviving the flow of sensitive goods, said observers. Top officials from Washington and Beijing on Tuesday (Jun 10) agreed on the preliminary plan after two days of intense discussions in London. The framework builds upon the groundwork that the superpowers laid in Geneva last month to ease tariffs they had taken against each other's economies. But further details, including plans for a next round of talks, remain sparse. 'It's important to realise that this remains a very fluid, a very contentious relationship,' said Alex Capri, a senior lecturer at the National University of Singapore Business School. 'In the past, historically, negotiating a proper free trade agreement literally took years because there are so many moving parts. There are so many elements … and that takes a lot of time.' Capri expressed skepticism about the efficacy of short-term negotiations, saying these might not lead to long-lasting agreements. 'I think we'll continue to see more transactionalism, and we'll probably see more and more of these types of shorter, one-on-one type of meetings that remain a work in progress,' he told CNA's Asia First. But observers said they are cautiously optimistic about the positive shift in tone between the two global superpowers. 'It's unclear what has been agreed to besides a sort of pathway to a framework to implement a concept of a plan. So it's early days,' said trade and economic policy expert Deborah Elms. 'But I suppose that the good news is, both sides do seem to see that escalation is not in their interest, and they agree that negotiations or discussions are important pathways to get to some kind of resolution.' GROWING WEAPONISATION OF RESOURCES However, analysts highlighted how countries have been weaponising their strategic commodities to gain an edge. China's dominance in rare earth minerals and America's lead in semiconductor innovations have become geopolitical bargaining chips. 'That is something that's here to stay,' said Capri. 'I think it's going to be more and more the new normal to see a linkage between tariff discussions and discussions about strategic supply chains such as rare earth and semiconductors.' He added: 'We're looking at a very transactional world, certainly under the Trump 2.0 administration where tariffs, export controls, sanctions, all of these things are going to be lumped together now in trade-related and commercial discussions.' Although the initial focus was tariff reduction, experts cautioned that these strategic issues could derail momentum. 'Both sides have identified that they have some cards to play in this dispute, and both have shown a willingness to use those if the negotiations start to unravel,' said Elms, who is head of trade policy at philanthropic organisation Hinrich Foundation. 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In a separate briefing, China's Vice Commerce Minister Li Chenggang noted that the framework would be taken back to US and Chinese leaders for review. 'The fact that both sides have to fly back to present whatever was discussed in person to their leaders tells you something about the negotiating leverage that the teams had on the ground,' said Elms. 'In other words, they weren't authorised ahead of time to accept an agreement. I think that it shows you how complicated these talks will ultimately be.' IMPORTANCE OF STRATEGIC ALLIANCES Observers warned that countries lacking strategic resources may find themselves increasingly sidelined in global trade discussions. 'Unfortunately, for the middle-tier countries that don't have that same kind of bargaining power … those countries are going to have less choice,' said Capri. 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Business Times
42 minutes ago
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South-east Asia's polymer production crisis worsens as US-China trade shift looms
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CNA
an hour ago
- CNA
Japan remains cautious on tariff impact in June econ report
TOKYO :Japan's government reiterated its warning on the risks from U.S. tariffs on economic growth, saying in a monthly report on Wednesday that the potential impact on corporate profits needed attention. The economy faces pressure from U.S. import levies of 24 per cent from July unless officials can negotiate them down. Japan's government is also seeking an exemption for its carmakers from a separate 25 per cent import tariff on vehicles. Japan's gross domestic product shrank an annualised 0.2 per cent in the January-March quarter, even before U.S. President Donald Trump announced his so-called "reciprocal" tariffs on April 2. "The economy is recovering moderately, while uncertainty is arising from U.S. trade policies," the Cabinet Office said in its monthly report for June released on Wednesday, keeping the assessment unchanged for a third month. In addition to tariffs, the report maintained its reference to "the effect of continued price rises on household sentiment and consumption" as another negative risk to the economy. It also noted that corporate profits were recovering, citing first-quarter business statistics, but added a fresh reference to the potential impact of trade disruptions. "With some firms withholding financial forecasts amid uncertainties surrounding U.S. tariffs, their impact on earnings may come to light only in the data for the April-June quarter or beyond," an official at the Cabinet Office told a press briefing. While no significant impact from U.S. tariffs on Japan's export volumes has been seen so far, trade trends from May onwards required attention, the official added. On wages, this spring's pay negotiations probably led to an average raise of more than 5 per cent, exceeding last year's, although smaller firms lagged bigger companies, the official said, based on the national labour group Rengo's data. Prime Minister Shigeru Ishiba said earlier this week that his ruling party would pledge to achieve growth of more than 50 per cent in Japan's average income by 2040 in campaigning for the upper house elections next month.
