Oil gains ground after trade remarks ease traders’ concerns

Tokyo — Oil prices rose on Tuesday after US President Donald Trump predicted a trade deal with China after positive comments by Beijing, calming nerves after a round of tit-for-tat tariff hikes had sent markets reeling.

Brent crude was up by 25c, or 0.4%, at $58.95 a barrel by 2.14am GMT, after falling 1% in the previous session, dropping for a third day in a row. US crude was up by 30c or 0.6% at $53.94 a barrel, having also dropped 1% on Monday for a fourth day of declines.

On Monday Trump said he believed China was sincere about wanting to reach a deal, while Chinese vice-premier Liu He said China was willing to resolve the dispute through “calm” negotiations, settling global markets.

“For now, the street is in thrall to the president’s comments, with financial markets doing abrupt changes of direction on his words that wouldn’t look out of place in the Fast and the Furious film,” said Jeffrey Halley, senior market analyst at OANDA.

Oil prices have fallen around 20% from a 2019 high reached in April, in part because of worries that the US-China trade conflict is hurting the global economy, which could dent demand for oil.

China’s commerce ministry said last week it would impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the US, including crude oil, agricultural products and small aircraft.

In retaliation, Trump said he was ordering US companies to look at ways to close operations in China and make products in the US.

“Unless you believe a trade deal will happen the slowdown in the global economy continues and earnings all over the globe will be under pressure,” said Greg McKenna, strategist at McKenna Macro.

The measures are prompting reactions from Chinese companies, with Sinopec seeking a tariff exemption for importing US oil in the coming months, sources told Reuters.

Meanwhile, US crude oil and fuel inventories were likely to have fallen last week, while distillate stockpiles rose, a preliminary Reuters poll showed. Five analysts estimated, on average, that crude inventories fell 2.1-million barrels in the week to August 23.

Reuters