Crude oil climbs more than US$1.60 a barrel on tariff cuts, economic outlook
[HOUSTON] Crude oil futures climbed more than US$1.60 a barrel on Tuesday, lifted by a temporary cut in US-China tariffs and a better-than-expected inflation report.
Brent crude futures settled at US$66.63 a barrel, up US$1.67, or 2.57 per cent. US West Texas Intermediate (WTI) crude finished at US$63.67, up US$1.72 or 2.78 per cent.
The two benchmarks rose by about 4 per cent or more in the previous session after the US and China agreed on sharp reductions to their import tariffs for at least 90 days, which also boosted stocks on Wall Street and the dollar.
'We didn't participate as much as other markets did yesterday in the China boom, so we're catching up today,' said John Kilduff, a partner with Again Capital LLC. 'Also the data this morning gives the Fed room to potentially begin making some moves.'
The US Labor Department reported on Tuesday that the Consumer Price Index rose 2.3 per cent in the 12 months through April, the smallest year-over-year gain in four years, leading Wall Street firms like JPMorgan Chase and Barclays to cut their forecasts of a US recession in the coming months.
The tamer inflation reading will likely be greeted with some relief by the Federal Reserve, which has kept its benchmark interest rate unchanged since last cutting it in December. The US central bank has paused its rate cuts amid concerns that the trade war could reignite inflation.
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'All the numbers are bullish today,' said Phil Flynn, senior analyst with Price Futures Group. 'The inflation number, the economic data are very supportive.'
The Organization of the Petroleum Exporting Countries and its allies, a group called Opec+, are planning to boost oil exports in May and June, which is seen as possibly limiting oil's upside.
Opec has raised oil output by more than previously expected since April, with its May output likely to increase by 411,000 barrels per day.
Meanwhile, sources told Reuters that Saudi Arabia's crude oil supply to China will hold steady in June after hitting its highest level in more than a year in the previous month after an Opec+ decision to increase output.
The kingdom is the second-largest crude supplier to China behind Russia.
Elsewhere, signs broadly point to demand for refined fuel remaining strong.
'Despite the deteriorating outlook for crude demand, positive signals from the fuel markets cannot be overlooked,' JPMorgan analysts said in a note.
'Although international crude prices have declined by 22 per cent since their peak on Jan 15, both refined product prices and refining margins have remained stable.'
Reduced refining capacity - mostly in the US and Europe - is tightening petrol and diesel balances, increasing reliance on imports and raising susceptibility to price spikes during maintenance and unplanned outages, they added. REUTERS
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Consider the dilemma faced by Kristian Gkolomeev, an accomplished 31-year-old swimmer who has competed in the last four Summer Olympics for Greece. By his own admission, it has not exactly been a financially lucrative existence. In 2016, for example, the Greek government supported some of its top Olympians with stipends of less than US$1,000 (S$1,300) per month. Then and now medal winners receive lucrative bonuses, but Gkolomeev has never won one. Enter the Enhanced Games. In 2024, in hopes of drumming up interest in the event, organisers offered a US$1 million bounty for breaking the men's 50 and 100-metre freestyle swim. Gkolomeev signed up, juiced himself, and sure enough, 'broke' – a term that should be used loosely when it involves steroid usage – the 50m record in February. In late May, at the Enhanced Games announcement, he was unapologetic when he told reporters: 'A successful year at the Enhanced Games for me is more than I could make in 10 careers.' 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That sentiment has remained stubbornly intact even as the Games have evolved into a multi-billion-dollar advertising platform for the world's biggest brands. In 2024, for example, the IOC reacted furiously when World Athletics, the governing body for sports such as track and field, announced plans to pay US$50,000 to gold medalists in its events. From the IOC's perspective, compensation only serves to widen the gaps between more and less privileged countries and competitors. It is a tone-deaf response that highlights how out of touch – and perhaps ambivalent – the Olympics are with the lived reality of the athletes who generate its revenue. The Enhanced Games are built to exploit the oversight. 'One of our core principles is we want to make our athletes as rich as possible,' explained Aron D'Souza, president of the sporting event, in a May interview with Men's Health. There will be ample opportunities to do that in Las Vegas. The Enhanced Games plan to host competitions in three categories – swimming, track and field, and weightlifting. Each event will feature a US$500,000 purse, with the winner earning US$250,000. In addition, everyone competing will receive an appearance fee and is eligible to win bonuses for 'breaking' world records (as Gkolomeev did). That is potentially a lot of money, though it is not likely to be enough for the world's top Olympians – those who might win Olympic gold. They would be forfeiting their reputations and chances at sponsorship deals. But the Enhanced Games does not need that kind of competitor. After all, enhancement is all about taking someone who cannot win a race or set a record and turning them into an athlete who can. There are many people who will never touch a medal podium who will be eligible for that role. For anyone who cares about the integrity of sports, this is a tragic outcome. And it would not be the last of its kind. As long as the Olympics and other elite sporting competitions remain tethered to outdated beliefs of compensation, there will be opportunities for exploitation. Over time, each instance will only serve to erode the public's confidence in the fairness of competition. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
