Oil Leads Commodity Rally After US-China Truce as Gold Retreats
Oil and most other commodities powered higher, while gold fell, after China and the US ratcheted down trade tensions that had threatened to slash demand for raw materials.
West Texas Intermediate crude added as much as 4.2% in New York and copper rose as much as 1.4% before paring gains. European natural gas extended gains, while soybeans and iron ore also rallied. Shares of the top mining companies surged.
The truce between the world’s two largest economies brings relief to commodity markets roiled by prohibitive tariffs that dented the outlook for global economic growth in recent weeks. Oil watchers have slashed demand forecasts, and the trade war already was showing signs of reducing the volume of goods arriving in the US.
“It’s a ‘risk back on’ signal,” Dennis Kissler, senior vice president for trading at BOK Financial Securities, said of the temporary trade deal.
China will reduce tariffs on US goods to 10% from 125%, while America will cut its own curbs to 30% from 145% in an arrangement lasting for 90 days. At a briefing after the talks, US Treasury Secretary Scott Bessent said neither nation wanted their economies to decouple. Both countries said they would establish a mechanism to continue discussions on economic and trade relations.
Commodities have been volatile ever since President Donald Trump first announced so-called reciprocal tariffs in early April. Oil prices are still down more than 10% since then as the market contends with rising supplies from the Organization of the Petroleum Exporting Countries and its allies.
While commodity trading advisers are still largely betting against crude, they’re moving off their extreme bearish stance. The funds, which can accelerate price momentum, liquidated short positions to sit at 82% short in both WTI and Brent on Monday, compared with 91% short on May 9, according to data from Bridgeton Research Group.
Brent oil advanced as much as 3.9% to $66.40 a barrel
WTI added as much as 4.2% to $63.61
Source : Bloomberg
