Oil prices edge higher as hopes rise for US-China trade talks

SINGAPORE: Oil prices pulled ahead in early Asian hours on Friday after China said its door is open for talks with the United States, raising hopes of a de-escalation in a bitter trade war between the world’s two largest economies.

Brent crude futures rose 38 cents, or 0.6 per cent, to $62.51 a barrel by 0136 GMT, while US West Texas Intermediate crude futures added 38 cents, or 0.6 per cent, to $59.62 a barrel.

China’s commerce ministry on Friday said the United States has recently taken steps to open a dialogue with Beijing by conveying information through relevant parties.

Concerns that the broader trade war could push the global economy into a recession and crimp oil demand, just as the OPEC+ group is preparing to raise output, have weighed heavily on oil prices in recent weeks.

However, the signals of a potential easing in trade tensions between the United State and China, the world’s biggest importer of crude oil, supported sentiment towards crude.

Oil prices were also underpinned by a threat from US President Donald Trump to impose secondary sanctions on buyers of Iranian oil.

The threat raised fears of tighter crude oil supplies, ANZ bank analysts said in a note.

Trump’s comments followed a postponement of US talks with Iran over its nuclear program. He had previously restored a “maximum pressure” campaign against Iran, which included efforts to drive the country’s oil exports to zero, to help prevent Tehran from developing a nuclear weapon.

Oil prices had gained late in Thursday’s session to settle nearly 2 per cent higher on Trump’s remarks, erasing some of the losses recorded earlier in the week on expectations of more OPEC+ supply coming to the market.

Reuters on Wednesday reported that Saudi Arabia, de facto leader of OPEC+, has briefed allies and industry experts that it is unwilling to prop up oil prices with further supply cuts.

Several OPEC+ members are set to suggest the group accelerates output hikes in June for a second consecutive month, Reuters earlier reported. Eight OPEC+ countries will meet on May 5 to decide a June output plan.

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