Oil Rises Nearly 2% on U.S.-China Negotiation Reports
Uncertainty surrounding trade tensions has led several banks, including UBS, BNP Paribas, and HSBC, to revise their crude price forecasts.
Quick overview
- Oil prices gained nearly 2% on Wednesday, driven by a bullish outlook on U.S.-China trade talks.
- Brent futures rose to $65.79 per barrel, while U.S. WTI crude climbed to $62.34.
- China is demanding 'more respect' from the U.S. before agreeing to trade negotiations, which could impact oil demand.
- Global oil demand growth is projected to slow significantly, with an increase of only 730,000 bpd expected this year.
Oil prices reversed early losses and gained nearly 2% on Wednesday, as the market took a bullish view on China’s stance regarding potential trade talks with the U.S.
However, gains were limited by ongoing concerns that the trade war could hinder energy demand.
Brent futures rose 1.7% to $65.79 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed 1.7% to $62.34.
China Demands “More Respect” from U.S.
Prices initially fell, but analysts noted that the momentum shifted after a Bloomberg report cited an anonymous source stating that China demands more respect from the U.S. government before agreeing to talks. The source also mentioned that China wanted the U.S. to appoint a new main contact for future negotiations.
A de-escalation of the U.S.-China trade war could reduce the downside risks to economic growth prospects and limit the negative impact on global oil demand growth.
Global oil demand is expected to grow at its slowest pace in five years in 2025, with U.S. production growth also set to decline due to President Trump’s tariffs on trading partners and retaliatory measures, the International Energy Agency (IEA) said on Tuesday.
Global Oil Demand Outlook
This year, global oil demand is expected to increase by 730,000 barrels per day (bpd), the IEA said, a sharp decline from the 1.03 million bpd forecasted last month. The reduction is larger than the demand cuts made by the Organization of the Petroleum Exporting Countries (OPEC) on Monday.
Concerns over Trump’s tariff escalation, combined with rising production from the OPEC+ group, which includes Russia, have already dragged oil prices down by about 13% this month.
Uncertainty surrounding trade tensions has led several banks, including UBS, BNP Paribas, and HSBC, to revise their crude price forecasts lower.
Wednesday’s data showed that China’s GDP grew by 5.4% year-on-year in the first quarter, surpassing the 5.1% expected in a Reuters survey.
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