Oil Updates — prices dip on weak China data, but hopes for US-China trade deal support
SINGAPORE: Oil prices slipped on Monday on weak China data, but held on to most of last week's gains, as investors awaited US-China trade talks in London later in the day, hoping a deal could boost the global economic outlook and fuel demand.
Brent crude futures slipped 18 cents, or 0.27 percent, to $66.29 a barrel by 08:44 a.m. Saudi time. US West Texas Intermediate crude fell 15 cents, or 0.23 percent, to $64.43.
China's exports growth slowed to a three-month low in May as US tariffs slammed shipments, data showed, while factory-gate deflation deepened to its worst in two years, heaping pressure on the world's second-largest economy both at home and abroad.
The data also showed that China's crude oil imports declined in May to the lowest daily rate in four months, as state-owned and independent refiners underwent widespread planned maintenance.
'Bad timing for crude oil, which was testing the top of the range and knocking on the door of a technical break above $65,' said IG market analyst Tony Sycamore, referring to WTI prices.
'That said I would expect the reaction to be less extreme than usual, given US and China trade talks later today.'
Brent had advanced 4 percent, and WTI gained 6.2 percent, last week for their first weekly gain in three, as the prospect of a US-China trade deal boosted some investors' risk appetite.
A US jobs report showing unemployment held steady in May appeared to increase the odds of a Federal Reserve interest rate cut, further supporting gains last week.
The prospect of a China-US trade deal that could support economic growth and increase demand for oil outweighed worries about increased OPEC+ supply after the group announced on May 31 another big output hike for July.
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, it said in a research note on Friday.
Capital Economics researchers said they believe the 'new faster pace of (OPEC+) production rises is here to stay.'
WTI's discount to Brent has also been narrowing on a combination of increased OPEC+ output, modest US crude oil supply growth and the potential for output declines next year, ING analysts led by Warren Patterson said in a note.
The US benchmark strengthened on supply concerns after wildfires disrupted production in Canada and robust US fuel demand during the summer driving season.
The number of operating US oil rigs, an early indicator of future output, fell by nine to 442 last week, energy services firm Baker Hughes said on Friday.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Al Arabiya
38 minutes ago
- Al Arabiya
Hopes rise as US and China hold second day of trade talks
The United States and China began a second day of trade talks on Tuesday, seeking to shore up a shaky tariff truce in a bitter row deepened by export curbs. The gathering of key officials from the world's two biggest economies began Monday in London, after an earlier round of talks in Geneva last month. Stock markets wavered as investors hoped the talks will bring some much-needed calm on trading floors and ease tensions between the economic superpowers. A US Treasury spokesman told AFP on Tuesday the 'talks resumed earlier this' morning. One of US President Donald Trump's top advisers said he expected 'a big, strong handshake' at the end of the talks in the historic Lancaster House, operated by the UK foreign ministry. Trump told reporters at the White House on Monday: 'We are doing well with China. China's not easy.' 'I'm only getting good reports.' The agenda is expected to be dominated by exports of rare earth minerals used in a wide range of things including smartphones, electric vehicle batteries and green technology. 'In Geneva, we had agreed to lower tariffs on them, and they had agreed to release the magnets and rare earths that we need throughout the economy,' Trump's top economic adviser, Kevin Hassett, told CNBC on Monday. But even though Beijing was releasing some supplies, 'it was going a lot slower than some companies believed was optimal,' he added. Still, he said he expected 'a big, strong handshake' at the end of the talks. 'Our expectation is that after the handshake, any export controls from the US will be eased, and the rare earths will be released in volume,' Hassett added. He also said the Trump administration might be willing to ease some recent curbs on tech exports. Concessions? Tensions between Washington and Beijing have heightened since Trump took office in January, with both countries engaging in a tariffs war hiking duties on each other's exports to three figures -- an effective trade embargo. The Geneva pact to cool tensions temporarily brought new US tariffs on Chinese goods down from 145 percent to 30 percent, and Chinese countermeasures from 125 percent to 10 percent. But Trump recently said China had 'totally violated' the deal. 'Investors are willing to grab on to any positive trade headline right now, as this is keeping hopes of a rally alive,' said Kathleen Brooks, research director at trading group XTB. Ipek Ozkardeskaya, senior analyst at the Swissquote Bank, said that although there had been 'no breakthrough' it seemed 'the first day of the second round of negotiations reportedly went relatively well.' 'Rumours are circulating that the US may be willing to make concessions on tech exports in exchange for China easing restrictions on rare earth metal exports,' she said. Rare earth shipments from China to the US have slowed since the tariff war was triggered by Trump's so-called 'Liberation Day' announcements, according to Brooks. The US leader slapped sweeping levies of 10 percent on friend and foe alike, and threatened steeper rates on dozens of economies. The tariffs have already had a sharp effect, with official figures from Beijing showing Chinese exports to the United States in May plunged by 12.7 percent. China is also in talks with other trading partners -- including Japan and South Korea -- to try to build a united front to counter Trump's tariffs. Chinese leader Xi Jinping on Tuesday urged South Korea's new President Lee Jae-myung to work with Beijing to uphold free trade to ensure 'the stability and smooth functioning of global and regional industrial and supply chains.' 'A healthy, stable, and continuously deepening China-South Korea relationship aligns with the trend of the times,' Xi said in a phone call, according to the Xinhua news agency. Chinese Vice Premier He Lifeng is heading the team in London, which included Commerce Minister Wang Wentao and China International Trade Representative Li Chenggang. US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer are leading the US delegation.
Arab News
3 hours ago
- Arab News
Pakistan says China has offered to sell new military equipment, including J-35 fighter jets
ISLAMABAD: Pakistan's government this month announced that China has offered to sell it its new military equipment, including 40 of its advanced fifth-generation J-35 fighter jets and ballistic missile defense systems following Islamabad's armed conflict with India in May. Nuclear-armed neighbors India and Pakistan engaged in armed conflict for four days from May 7-10, pounding each other with artillery fire, fighter jets, drones and missiles. Fighting stopped on May 10 when US President Donald Trump announced both countries had agreed to a ceasefire. Pakistan said its air force downed six Indian fighter jets using Chinese J-10C aircraft on the night of May 6. On May 31, the chief of defense staff of the Indian Armed Forces, Anil Chauhan, confirmed India lost an unspecified number of fighter jets in clashes with Pakistan last month. Both countries have since then sought to bolster their defense capabilities and procure the latest arms as tensions continue to simmer between both nations. Pakistan's government said in a social media post on June 7 that China has also offered to sell KJ-500 airborne early warning and control aircraft, as well as HQ-19 ballistic missile defense systems to Pakistan. 'Under Prime Minister Muhammad Shehbaz Sharif, Pakistan has achieved several major diplomatic achievements including the offer of 40 fifth-generation J-35 stealth aircraft, KJ-500 AWACS, HQ-19 defense systems from China, and the deferment of $3.7 billion in debt,' the Government of Pakistan wrote on social media account X. وزیراعظم محمد شہباز شریف {@CMShehbaz } کی زیرِ صدارت پاکستان نے کئی عظیم سفارتی کامیابیاں حاصل کیں، جن میں چین کی جانب سے 40 ففتھ جنریشن J-35 اسٹیلتھ طیارے، KJ-500 اواکس، HQ-19 ڈیفنس سسٹم کی پیشکش اور 3.7 بلین ڈالر قرض کی مؤخر ادائیگی شامل ہے، ہواوے کے تعاون سے 100,000 پاکستانیوں… — Government of Pakistan (@GovtofPakistan) June 6, 2025 As per a report in the international news publication Bloomberg on Monday, the shares of Chinese defense companies rallied this week after Pakistan's announcement of Beijing's offer to sell its aircraft. The report said shares of AVIC Shenyang Aircraft Company— the maker of China's J-35 stealth fighter jet— soared by their 10 percent daily limit in Shanghai, extending gains for the third consecutive session on Monday. The shares of another China-based company, Aerospace Nanhu Electronic Information Technology Co., soared by 15 percent, the report added. The shares of Chinese arms makers have surged since Pakistan said its air force downed six Indian fighter jets, using Chinese J-10C aircraft, on the night of May 6. The two countries had engaged in armed conflict that day after India struck what it called 'terrorist' camps in Pakistan. The J-35 stealth fighter jet was developed by Shenyang Aircraft Corporation and publicly unveiled at the 2024 Zhuhai Airshow. Its sale to Pakistan would mark China's first export of the fifth-generation jet, which has advanced stealth capabilities for penetrating the airspace of an adversary. On the other hand, the KJ-500 aircraft would improve Pakistan's radar coverage, and its smaller size allows for nimbler use in regional clashes, the report said. The HQ-19 surface-to-air missile systems would enhance the country's ability to intercept ballistic missiles. 'In a sign of how the conflict is changing dynamics, Indonesia— which has relied on aircraft from makers in the US, Russia and elsewhere— is mulling China's offer of J-10 jets,' Bloomberg reported. 'Southeast Asia's largest economy has bought munitions and air surveillance systems from China in the past, but not jet fighters.' Tensions reached a boiling point when India blamed Pakistan for supporting an attack in Indian-administered Kashmir on April 22. Gunmen had killed 26 Indian tourists in Pahalgam resort. New Delhi, which has always blamed Pakistan for supporting militant outfits in the part of Kashmir it governs, accused Islamabad of having a hand in the attack. Pakistan denied the allegations and called for an international probe into the incident. Though the fragile ceasefire continues to hold, ties between the two countries remain strained. New Delhi and Islamabad have both sent delegations to world capitals in hopes of swaying international opinion in their favor.
Al Arabiya
4 hours ago
- Al Arabiya
Hong Kong to toughen national security checks for food, entertainment spots
Hong Kong will toughen screening of caterers and other food and entertainment businesses for potential violations of national security, which civil servants should accord top priority in deciding license approvals, the city's leader said on Tuesday. Critics see the move as targeting the Asian financial hub's many businesses, including cafes and restaurants, that have displayed posters, symbols or images expressing solidarity with its embattled pro-democracy movement. Numbering in the hundreds, and sometimes called 'conscience-driven businesses', they face growing pressure from authorities, such as greater tax scrutiny and fire safety and customs checks, at a time when many reel from an economic and retail downturn. 'Food and environmental hygiene officers ... should place national security as the most important consideration and make appropriate assessments,' John Lee told reporters. He called the move 'appropriate and necessary', saying all civil servants were expected to rate security as the highest priority under the national security law. The city's food and hygiene department would follow the law in considering new licenses and renewing existing ones, he added. In recent years, authorities in the Asian financial hub have made use of sweeping national security laws imposed after mass anti-government protests in 2019 to systematically crack down on many of its liberal pockets. In May, the Food and Environmental Hygiene Department sent letters to thousands of food and entertainment premises, obliging them to accept new terms related to national security. In one document seen by Reuters, the government told business owners to ensure no activity in which they were engaged or involved in 'may constitute or cause the occurrence of an offence endangering national security.' One owner of several eateries run on lines he described as 'values-based', said he would 'simply carry on with a calm and steady mindset', and strive to follow all regulations. 'Regardless of one's social or political stance, over 90 percent of Hong Kong's businesses are currently struggling under the weight of the economic downturn,' added the owner, who sought anonymity for fear of reprisals. The former British colony's crackdown on dissent, from arresting democratic activists to shuttering liberal media and civil society groups, has drawn criticism from countries such as Australia, Britain, Canada and the United States.
