Oil prices hit multi-week highs amid US-China trade talks

[NEW YORK] Oil prices hit multi-week highs on Monday, buoyed by a weaker US dollar, while investors awaited news from US-China trade talks in London in hopes a deal could boost the global economic outlook and subsequently fuel demand.

Brent crude futures settled 57 cents higher, or 0.9 per cent, to US$67.04 a barrel. During the session, the benchmark rose to US$67.12 a barrel, the highest since April 28.

US West Texas Intermediate crude rose 71 cents, or 1.1 per cent, to US$65.29. The contract reached US$65.38 a barrel during the session, the highest since April 4.

A weaker US dollar gave some support to oil prices, as the dollar index dropped 0.3 per cent, making oil cheaper for holders of other currencies.

Last week, Brent rose 4 per cent and WTI gained 6.2 per cent as the prospect of a US-China trade deal boosted risk appetite for some investors.

“Much of this advance appears technically driven and such rallies can easily subside without new bullish headlines,” analysts at energy advisory firm Ritterbusch and Associates said in a note. “Much attention will be given to the ongoing US-China trade talks.”

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

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

Monday’s talks could dampen the impact on prices of Chinese data releases, IG market analyst Tony Sycamore said.

Chinese export growth slowed to a three-month low in May as US tariffs curbed shipments while factory gate deflation deepened to its worst in two years, heaping pressure on the world’s second-largest economy at home and abroad.

“Bad timing for crude oil, which was testing the top of the range and knocking on the door of a technical break above US$65,” Sycamore said, referring to WTI prices.

The data also showed that China’s crude oil imports declined in May to the lowest daily rate in four months as state-owned and independent refiners began planned maintenance.

The prospect of a potential China-US trade deal outweighed concern over the price impact from increased output by the Opec+ group of oil producers next month.

The Organization of the Petroleum Exporting Countries’ oil output rose in May by less than the volume planned, a Reuters survey found, 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.

Opec pumped 26.75 million barrels per day last month, up 150,000 bpd from April’s total, the survey showed on Monday, with Saudi Arabia making the largest increase. REUTERS