Oil prices mixed as hope lingers for flagging US-China talks

Oil prices rose more than $1 a barrel on Monday but then fell with Wall Street as the negative turn in the US-China talks spooked investors. (Reuters)
Updated 14 May 2019
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Oil prices mixed as hope lingers for flagging US-China talks

  • China on Monday ignored a warning from President Donald Trump and moved to impose higher tariffs on a range of US goods
  • China’s top diplomat, State Councilor Wang Yi, indicated that Beijing hoped for a compromise

LONDON: Oil was mixed on Tuesday as tensions in the Gulf appeared to stop short of a military showdown and both sides in the US-China trade talks sounded conciliatory notes, signaling that a breakdown might be avoided.
Brent crude futures were at $70.40 a barrel at 0755 GMT, up 38 cents or 0.24 percent. Brent ended the previous session down 0.6 percent.
US West Texas Intermediate (WTI) crude futures were at $60.92 per barrel, down 12 cents or 0.2 percent. WTI closed down 1 percent on Monday.
The negotiations between the United States and China appeared headed toward success last week but have largely unraveled over US accusations that Beijing sought vast, last-minute changes.
China on Monday ignored a warning from US President Donald Trump and moved to impose higher tariffs on a range of US goods including frozen vegetables and liquefied natural gas.
But the Chinese government’s top diplomat, State Councilor Wang Yi, indicated on Monday that Beijing hoped for a compromise: “Both countries’ negotiating teams have the ability and wisdom to resolve each other’s reasonable demands.”
Trump on Monday said he expected to speak to Chinese President Xi Jinping at a G20 summit in late June and have “probably a very fruitful meeting.”
“Market participants (are) increasingly having to do their own guesswork and read between the lines to ride the latest wave of volatility in the financial markets,” analyst Vandana Hari of Vanda Insights said.
“The US president’s comments likely tilted the balance in favor of the optimists, who continue to expect a rapprochement despite last week’s major setback in trade negotiations.”
Oil rose more than $1 a barrel on Monday but then fell with Wall Street as the negative turn in the US-China talks spooked investors.
In the Middle East, Saudi Arabia said two of its oil tankers were among those attacked off the coast of the United Arab Emirates on Sunday, describing it as an attempt to undermine the global oil supply.
A US official said Iran was the likely culprit.
Tehran has been embroiled in an escalating war of words with the United States over stricter US sanctions, which have cut its oil exports and tightened global supply. Iranian officials denied responsibility for the incident.
A fifth of global oil consumption passes through the Strait of Hormuz from Middle East crude producers to global markets.


Oil rises on US-Iran tensions, but trade war concerns weigh

Updated 21 May 2019
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Oil rises on US-Iran tensions, but trade war concerns weigh

  • There are expectations producer club OPEC will continue to withhold supply this year
  • President Donald Trump on Monday threatened Iran with ‘great force’ if it attacked US interests in the Middle East

SINGAPORE: Oil prices rose on Tuesday on escalating US-Iran tensions and amid expectations that producer club OPEC will continue to withhold supply this year.
But gains were checked by concerns that a prolonged trade war between Washington and Beijing could lead to a global economic slowdown.
Brent crude futures, the international benchmark for oil prices, were at $72.24 per barrel at 0534 GMT, up 27 cents, or 0.4 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were up 26 cents, or 0.4 percent, at $63.36 per barrel.
“Escalating tensions between the US and Iran, in addition to signs that OPEC will continue its production cut, drove oil higher,” said Jasper Lawler, head of research at futures brokerage London Capital Group.
US President Donald Trump on Monday threatened Iran with “great force” if it attacked US interests in the Middle East. This came after a rocket attack in Iraq’s capital Baghdad, which Washington suspects to have been organized by militia with ties to Iran.
Iran said on Tuesday that it would resist US pressure, declining further talks under current circumstances.
The tension comes amid an already tight market as the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers have been withholding supply since the start of the year to prop up prices.
A meeting has been scheduled for June 25-26 to discuss the policy, but the group is now considering moving the event to July 3-4, according to OPEC sources on Monday, with its de-facto leader Saudi Arabia signaling a willingness to continue withholding output.
Price gains were constrained by pressure on financial markets, which have this week been weighed down by worries that the United States and China are digging in for a long, costly trade war that could result in a broad global slowdown.
Singapore, seen as a bellwether for the health of the global economy, on Tuesday posted its lowest quarterly growth in nearly a decade of 1.2 percent year-on-year. Growth in Thailand, a key Asian emerging market, also slowed to a multi-year low.