Oil prices rally on eased trade tensions

Marcus Newton
April 11, 2018

U.S. WTI crude for May delivery now +2.5% at $64.99/bbl and June Brent crude +2.4% at $70.32/bbl. Following Xi's speech, Asian stocks and US futures jumped in Asian morning trading.

"Investors may start pricing in a much higher risk premium", said Hussein Sayed, chief market strategist at FXTM. Syria and Russian Federation blamed Israel for carrying out an attack on a Syrian air base near Homs on Monday which followed reports of a poison gas attack by President Bashar al-Assad's forces on a rebel-held town. That was the highest finish for the most active contract since December 1, 2014, according to FactSet.

With Chinese markets closed last Thursday and Friday, Shanghai crude futures ISCc1 played catch-up on Monday, dropping 0.2 percent to around 401.4 yuan ($63.73) per barrel.

In the United States, drillers added 11 rigs looking for new production in the week to April 6, bringing the total count to 808, the highest level since March 2015, General Electric's (GE.N) Baker Hughes energy services firm said on Friday.

"Oil prices have been susceptible to the brewing trade tensions between China and the US ..."

The Saudis want oil prices near $80, in part to support the valuation of state-owned energy giant Aramco ahead of its initial public offering, Bloomberg News reported Tuesday (https://www.bloomberg.com/news/articles/2018-04-10/saudi-arabia-is-said-to-signal-ambition-for-80-oil-price?utm_medium=social&utm_campaign=socialflow-organic&utm_content=markets&cmpid%3D=socialflow-twitter-markets&utm_source=twitter), citing people who have spoken to delegates from the Organization of the Petroleum Exporting Countries and oil market participants.

More news: Apple announces new (PRODUCT)RED iPhone 8 and iPhone 8 Plus
More news: Trump Expects Talks with N.Korea in May or Early June
More news: Guardiola: Man City deserve greater title credit after derby defeat

Past the trade dispute, changes in the Trump administration have triggered fears over the possibility of returning USA sanctions on main oil exporting countries, including Iran, Venezuela, and Russian Federation.

In New York, May West Texas Intermediate crude rose on $US2.09, or 3.3%, to settle at $US65.51 a barrel.

U.S. WTI crude futures were up 25 cents at $62.31 a barrel.

The oil market got another boost later on in the day after data from the United States government said domestic production would be slightly lower in 2018 than previously - but not by much.

Gasoline stocks fell by 1.1 million barrels, compared with analysts' expectations for a 1.3 million barrels drop.

Oil prices overall remain optimistic due to strong demand, as well as the supply curb by the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation.

Other reports by MaliBehiribAe

Discuss This Article