Oil hits US$70 as China offers soothing words on trade

Oil inches higher

Oil firm

Oil prices rose Tuesday morning amid receding U.S.

Oil markets stabilized on Monday after having lost around 2 percent last Friday as concerns grew over the impact on global growth from an intensifying trade dispute between the United States and China, as well as increased USA drilling activity.

US West Texas Intermediate (WTI) crude futures for the May contract edged higher by 1.2 percent to $64.22 per barrel, while worldwide benchmark Brent futures for June delivery climbed by 1.2 percent to $69.53 per barrel.

The global oil marker rose as much as 3.9% to $71.34 a barrel, blowing past its recent January peaks to reach a level last seen in December 2014.

Despite a softening of trade concerns, oil markets still face an abundance of supplies that puts pressure on producers to keep their prices competitive in order not to lose market share.

Oil prices have scored gains of almost five per cent in the last two sessions, recovering much of what they lost last week when the U.S.'s decision to slap China with tariffs on $50 billion worth of gold sent crude on a dive to a two-week low.

More news: Fire in Trump Tower in NY kills 1

Concerns of a prolonged trade dispute between the world's two biggest economies and uncertainty over the supply and demand balance of global oil markets have made for volatile trading in the last few weeks.

"There are headlines of a US carrier group heading to the Middle East, the Saudis are looking for $80 Brent crude, and this is ahead of API inventories", said Roberto Friedlander, head of energy trading at Seaport Global Securities.

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.

Both equity and oil markets rallied after the speech, while supposed safe havens such as U.S. Treasurys and gold slipped, supporting Wall Street's thesis that a trade war between the economic superpowers is increasingly unlikely. U.S. President Donald Trump promised a "major response" within 24 to 48 hours to an alleged chemical attack in Syria, which he said could be the work of the Syrian government, Iran, Russia or all three.

That will likely make the United States the world's biggest oil producer by 2019, surpassing Russian Federation which now pumps out nearly 11 million bpd. The US Energy Information Administrations still expects production to total 10.7 million barrels a day this year - a record.

In a sign that oil supplies remain ample, China's Sinopec, Asia's largest refiner, plans to cut Saudi crude imports in May by 40 percent, instead buying from alternative sources, after Saudi Aramco set higher-than-expected official prices, a company official said on Monday.

Latest News