Oil prices extended gains on Tuesday, as the trade spat between the US and China showed signs of getting settled without causing any harm to the global economy.
US West Texas Intermediate (WTI) crude futures for the May contract edged higher by 1.2 percent to $64.22 per barrel, while international benchmark Brent futures for June delivery climbed by 1.2 percent to $69.53 per barrel.
The increases came after a more than 2 percent rise on Monday, which recovered the 2 percent slump on Friday, when oil prices also suffered their worst weekly declines in two months amid growing concerns over a trade war between the world’s two biggest crude consumers.
Oil prices have been in a volatile situation for the past few days, due to concerns over a continuous trade dispute between the US and China, and uncertainty over the supply and demand balance of global oil markets.
China’s Xi Jinping Vows to Reduce Vehicle Tariffs
Chinese President Xi Jinping stated on Tuesday that his government would reduce import tariffs for automobiles this year, as part of their plans to further open China’s economy to the world.
The statement addresses one of the grievances of US President Donald Trump, who has requested US trade officials last week to consider imposing another $100 billion in tariffs on Chinese products.
Trump said on Monday that China’s 25 percent tariff on imported autos was significantly higher than the 2.5 percent tariff that the US charges for foreign cars.
It was unclear however, how Xi’s promises will be able to resolve trade tensions between the two countries. China already put forward new tariffs on $50 billion of US goods and has warned to retaliate further.
As the leading crude oil importer and the world’s biggest energy consumer, China acts as a major determiner of global oil prices.
Rising Concerns on Possible US Oil Sanctions, US Crude Supply to Grow Further
Past the trade dispute, changes in the Trump administration have triggered fears over the possibility of returning US sanctions on main oil exporting countries, including Iran, Venezuela, and Russia.
Previous US sanctions has already hit Iran’s production by more than 1.2 million barrels per day (bpd).
Traders said weekly US fuel supply data would give further market guidance.
Oil prices overall remain optimistic due to strong demand, as well as the supply curb by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.
Still, growing US crude stockpile, which has risen since mid-2016 to 10.46 million bpd, have become a hindrance to OPEC’s plan to contain the supply glut and bolster prices.
The American Petroleum Institute (API) is set to release oil inventory figures later this day, while the Energy Information Administration is due to present on Wednesday.
In addition, US drillers have increased their rigs to 11 in the week to April 6, in an effort to obtain new crude production. The total count now adds up to 808, the highest level since March 2015, suggesting that the US will be having more supply to come.
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