Weak Dollar, US-China Trade Talks Take Crude Oil Prices Above $65

By Adedapo Adesanya

Crude oil prices rose on Monday, buoyed by a weaker Dollar as expectations around US-China trade talks in London spurred hopes a deal could boost the global economic outlook and subsequently fuel demand.

During the session, Brent crude was up by 57 cents or 0.9 per cent to $67.04 a barrel and the US West Texas Intermediate (WTI) crude increased by 71 cents or 1.1 per cent to $65.29 per barrel.

The US Dollar lost 0.3 per cent yesterday, making oil cheaper for holders of other currencies.

The prospect of a US-China trade deal also boosted risk appetite for some investors.

US President Donald Trump and China’s leader Xi Jinping spoke last Thursday before US and Chinese officials met in London on Monday to calm trade tensions between the two nations.

The American President said that the talks were going well and he was “only getting good reports,” according to Reuters.

China and the US have since repeatedly accused each other of violating the Geneva agreement, with the US saying China was slow to approve the export of additional critical minerals to the US, while China criticized the US imposing new restrictions on Chinese student visas and additional export restrictions on chips.

An agreement could potentially remove US restrictions on the sales of chipmaking software, jet engine parts, and ethane.

A trade deal between the US and China could support the global economic outlook and in turn boost demand for commodities including oil.

Countries have felt the impact of the recent development with China, the world’s largest oil importer, seeing its crude oil imports decline in May to the lowest daily rate in four months.

The deal outweighed concern over the price impact from increased output by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) group of oil producers next month.

OPEC’s oil output rose in May by less than the volume planned, as Iraq made further cuts to compensate for earlier pumping above target and Saudi Arabia and the United Arab Emirates made smaller hikes than allowed.

All 12 OPEC members produced 26.75 million barrels per day in May, up by 150,000 barrels per day from April.

The five OPEC members that have pledged cuts in the OPEC+ agreement and are now gradually unwinding these cuts had to raise their combined output by 310,000 barrels per day. However, they only lifted production by 180,000 barrels per day.