United States-China trade talks development will provide oil prices with an improvement of at least some stability, analysts say.
On Friday, U.S. President Donald Trump says that a phase one deal on trade had reached with China. Also, this is after the visit of Chinese Vice Premier Liu He to Washington. After more than a year of standoff talks between the world’s two largest economies – the U.S. and China – they finally had a deal. The standoff talks led to tit-for-tat tariffs being imposed by both nations on products worth hundreds of billions of dollars
West Texas Intermediate crude closed on $54.70 and Brent closing on $60.51 (Dh220). The rise is a positive reaction brought by the news from oil markets.
Commodity analyst, Edward Bell said oil markets managed to snap a few weeks of losses as risk appetite returner last week. Also, the outlines of a U.S.-China trade deal propelled oil prices higher, helping Brent futures close up to 3.7 percent. Additionally, WTI is up to 3.6 percent.
Trade growth, central bank action are some of the factors for the outlook for 2020 outcome of U.S.-China trade talks. Also, it should be merely apparent to markets that no primary agency is revising the demand forecasts higher. Global Markets and Treasury analysts highlighted how the oil markets were still facing pressure.
United States-China Trade Deal to Global Market
United States-China trade talks along with continued geopolitical tensions in the Middle East makes oil prices expected to range between $55-$60 in the near future. This is according to the head of Commodity Strategy Saxo Bank. Also, on Friday saw Iran claiming that one of its oil tankers came under attack on the Red Sea.
The Saudi Arabian oil attack’s geopolitical risk premium in September removed. Contrarily, events this past week shows why it could suddenly re-emerge. So, while the pressure continues to swing between demand and supply worries, it is expected that West Texas Intermediate (WTI) and Brent will stay range-bound over the coming weeks. It will be around $55/b and $60/b, respectively.
After receiving a fresh geopolitical boost, Brent crude oil returned to $60/bpd. This is after Turkish forces entered Northern Syria and after missiles battered an Iranian tanker. Also, the impact of this ongoing ambiguity highlighted the upside price risks. This was when the market focused on the negative price impact of slowing demand growth.
Global markets reacted positively after the news of a United States-China trade deal on Friday. The sentiment expected to carry over during the week. Also, in the United States, the Dow Jones was up by more than 300 points on Friday. Nasdaq and S&P 500 both closing by more than one percent.
Furthermore, in Asia, stock markets across the board also saw a rise, with the Nikkei closing over one percent higher. While in China, the Shanghai Stock Exchange was up 0.88 percent.
Europe’s markets also saw rallies with news of a potential Brexit deal made between the UK and the EU. Moreover, Europe Stoxx 600 was up by more than 2 percent on Friday.