Oil prices rise amid US-China trade talk optimism
Oil prices rose on Wednesday morning, amid investor optimism around trade talks between the US and China, which are due to begin this week.
Brent crude futures (BZ=F) were up 1.5%, to trade at $63.07 a barrel, while West Texas Intermediate futures (CL=F) climbed 1.7%, hitting $60.12 a barrel.
The talks are due to take place in Switzerland on Saturday and Sunday, it was announced on Tuesday. On the US side, the talks will be led by Treasury secretary Scott Bessent and chief trade negotiator Jamieson Greer, while China be respresented by by vice premier He Lifeng.
Bessent said in an interview on Fox News on Tuesday that the talks would focus on de-escalation rather than a major trade deal.
Read more: FTSE 100 LIVE: Stocks lacklustre as US and China set to start trade war talks
"We've got to de-escalate before we move forward,' he said. 'We don't want to decouple, what we want is fair trade."
Meanwhile, in a statement released after the talks were announced, China's ministry of commerce called on the US to "show sincerity" in the talks.
Escalating trade tensions between the US and China, as well as comments around broader tariffs by US president Donald Trump, have fuelled further volatility in markets over investor concerns that this could lead to an economic slowdown. Fears around the impact of a recession on fuel demand have weighed on prices.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Oil prices have continued to rise amid some hopes of a rapprochement with China and the US. There are also signs of weaker production in the United States which has helped brent crude, the benchmark, make fresh gains. Analysis from Diamondback Energy estimates that the number of rigs operating in the US is expected to be around 10% lower in the second quarter."
NY Mercantile - Delayed Quote
•
USD
(BZ=F) View Quote Details
62.55
-
+(0.64%)
As of 7:51:42 AM EDT. Market Open.
Advanced Chart
The pound dipped 0.2% against the dollar (GBPUSD=X) to trade at $1.3351 at the time of writing, as investors braced for the US Federal Reserve's interest rate decision later on Wednesday.
The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, was up 0.2% to 99.46 in early European trading.
CCY - Delayed Quote
•
USD
(GBPUSD=X) View Quote Details
1.3349
-
(0.00%)
As of 1:01:25 PM GMT+1. Market Open.
Advanced Chart
"The Fed is widely expected to keep rates on hold due to the unpredictability of US trade policy, despite calls from Trump for cuts," said Streeter. "The US economy contracted on an annual basis in the first quarter, but it was partly due to erratic buying behaviour, with imports surging as businesses stockpiled in a defensive move to try to minimise the worst of the initial wave of tariffs."
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNBC
35 minutes ago
- CNBC
Oil rises on Iran, Russia and Canada supply concerns
Oil prices rose in early Asia trade on Tuesday on concerns about supply, with Iran set to reject a U.S. nuclear deal proposal that would be key to easing sanctions on the major oil producer, and with production in Canada hit by wildfires. Brent crude futures gained 55 cents, or 0.85%, to $65.18 a barrel by 0000 GMT. U.S. West Texas Intermediate crude was up 59 cents, or 0.94%, to $63.11 a barrel, after rising around 1% earlier in the session. Both contracts gained nearly 3% in the previous session after OPEC+ agreed to keep output increases in July at 411,000 barrels per day, which was less than some in the market had feared and the same hike as in the previous two months. Geopolitical tensions supported prices on Tuesday. Iran was poised to reject a U.S. proposal to end a decades-old nuclear dispute, an Iranian diplomat said on Monday, saying it fails to address Tehran's interests or soften Washington's stance on uranium enrichment. If nuclear talks between the U.S. and Iran fail, it could mean continued sanctions on Iran, which would limit Iranian supply and be supportive of oil prices. The ongoing conflict between Russia and Ukraine continued to stoke supply concerns and geopolitical risk premiums. Adding to supply worries, a wildfire in the province of Alberta in Canada has prompted a temporary shutdown of some oil and gas production, which could reduce supply. According to Reuters calculations, wildfires in Canada have affected more than 344,000 bpd of oil sands production, or about 7% of the country's overall crude oil output. The big jump in oil prices on Monday mostly reflected relief that the Organization of the Petroleum Exporting Countries and allies, including Russia, did not go ahead with a larger production hike than in the previous two months. "With the worst fears not panning out, investors unwound their bearish positions they had built prior to the weekend's meeting," Daniel Hynes, senior commodity strategist at ANZ, said in a note.
Yahoo
2 hours ago
- Yahoo
China's factory activity cools in May as US tariffs hit
BEIJING (Reuters) - China's factory activity in May shrank for the first time in eight months, a private-sector survey showed on Tuesday, indicating U.S. tariffs are now starting to directly hurt the manufacturing superpower. The Caixin/S&P Global manufacturing PMI fell to 48.3 in May from 50.4 in April, missing analysts' expectations in a Reuters poll and marking the first contraction since September last year. It was also the lowest reading in 32 months. The 50-mark separates growth from contraction. The result is broadly in line with China's official PMI released on Saturday that showed factory activity fell for a second month. A federal appeals court temporarily reinstated the most sweeping U.S. tariffs, a day after a trade court ruled that President Donald Trump had exceeded his authority in imposing the duties and ordered an immediate block on them. Two weeks after breakthrough negotiations that resulted in a temporary truce in the trade war between the world's two biggest economies, U.S. Treasury Secretary Scott Bessent said on Thursday the talks are "a bit stalled". China's Premier Li Qiang last week said the country is mulling new policy tools, including some "unconventional measures", which will be launched as the situation evolves. According to the Caixin survey, new export orders shrank for the second straight month in May and at the fastest pace since July 2023. Producers said the U.S. tariffs restrained global demand. That dragged down overall new orders to the lowest since September 2022. Factory output meanwhile contracted for the first time since October 2023. Employment in the manufacturing sector declined at the sharpest pace since the start of this year, as producers cut headcount. Output prices have fallen for six straight months due to intense market competition. In the auto industry, for example, an intensifying price war in China has stoked fears of a long-anticipated shake-out in the world's largest car market. Robin Xing, Chief China Economist at Morgan Stanley, said this underscores how supply-demand imbalances continue to fuel deflation. "There is growing rhetoric about the need for rebalancing, but recent developments suggest the old supply-driven model remains intact. Thus, reflation is likely to remain elusive." Surprisingly, export charges rose for the first time in nine months, marking the fastest growth since July 2024, as companies cited rising logistics costs and tariffs. Overall, business optimism improved in terms of future output, as they expect the trade environment to improve with market expansion. Sign in to access your portfolio
Yahoo
2 hours ago
- Yahoo
Credit rating downgrade cost unknown for debt-hit state
Treasury boffins have not considered the fallout of another credit rating downgrade on paying down ballooning state debt. As parliamentary hearings into the Victorian state budget got underway on Tuesday, Department of Treasury and Finance secretary Chris Barrett admitted the threat of a credit rating downgrade was not modelled. The department has only assessed the budgetary impact of a 100 basis points rise in interest rates. Credit rating downgrades make it more expensive for governments to service debt, leaving less money to spend on critical services and infrastructure such as hospitals, roads and schools. Victoria's net debt is forecast to reach $194 billion by mid-2029, sending interest repayments soaring close to $29 million a day. S&P Global Ratings downgraded Victoria's credit rating two notches in 2020 from AAA to AA, the lowest of any Australian state or territory. Fellow ratings agency Moody's followed suit, stripping the state of its AAA status in February 2021 and downgrading it from AA1 to AA2 in 2022. Treasurer Jaclyn Symes is travelling to the US to meet with ratings agencies, including representatives from Moody's on Friday. Moody's post-budget report said Victoria's economic outlook remains positive, with the improving economic backdrop expected to ease risks from high and rising debt. But it warned Victoria wasn't completely out of the woods for a credit ratings downgrade. "Global economic uncertainties and geopolitical tensions pose risks to the fiscal outlook," the report said. "Should the risks materialise, or reform momentum weakens, or both, the potential for higher-than-expected debt and interest burdens would further weigh on Victoria's credit profile." Ms Symes also defended the use of treasurer's advances for major project milestones and sparred with Nationals MP Jade Benham over the government's controversial emergency services levy. All Victorian farmers will be spared from paying the increased tax on their land for 2025/26 after the entire state was declared drought-affected on Friday. The one year reprieve, along with carve-outs for Country Fire Authority and State Emergency Service volunteers and life members, means the expanded levy is expected to raise $73 million less than expected. But the treasurer remained adamant it won't compromise the Allan Labor government's funding commitments for emergency services.
