Oil prices rise to fresh highs as US-China trade progress
Oil prices rose to fresh highs on Wednesday as traders digested the outcome of key US-China trade talks in London.
At 6 a.m. ET (10:00 GMT), Brent crude futures rose 1% to $67.53 a barrel and West Texas Intermediate crude futures rose 1.1% to $65.71 a barrel.
Both benchmarks had hit their highest levels since April during the previous session. US-China trade framework lends support
US and Chinese officials ended two days of intense trade negotiations in London, agreeing to a framework aimed at rejuvenating the Geneva ceasefire and resolving a dispute over export controls.
The deal “lays foundation” on previous understandings by addressing mutual restrictions on critical technologies, US Commerce Secretary Howard Lutnick said Tuesday.
China has agreed to ease restrictions on rare earth and magnet exports, while the U.S. will lift some export controls on semiconductors and related technology.
Lutnick and Chinese Vice Commerce Minister Li Chenggang said the two governments will now seek formal approval from Presidents Trump and Xi before implementation.
While the framework is preliminary and lacks detailed details, its announcement lifted sentiment by easing escalating tariffs and supply chain tensions.
U.S.-Iran nuclear talks stall
Also providing some support was the lack of progress in Iran-U.S. nuclear talks.
The next round is due to be held this week, with Trump saying negotiations will be held on Thursday while Tehran said they will take place on Sunday in Oman. If the nuclear talks fail and a conflict with the United States erupts, Iran will attack American bases in the region, Defense Minister Aziz Nasirzadeh said on Wednesday, raising the temperature around the negotiations slightly.
"The nuclear talks between Iran and the U.S. appear to be stalling, which provides some fresh air for prices. Iran is unwilling to compromise on its right to enrich uranium, something the U.S. will not accept," analysts at ING said in a note.
Investors assess demand outlook; API weekly data in focus. U.S. crude oil production is expected to decline next year as drilling activity slows, driven by weaker commodity prices, the U.S. Energy Information Administration said Tuesday in its monthly report.
The EIA also cut its global oil demand forecast for this year by about 200,000 barrels per day to 103.5 million barrels per day, pointing to weaker consumption in developed countries.
"Given our view that oil prices will be lower towards the end of this year, there is scope for further downward revisions in U.S. crude oil production estimates for next year," ING analysts said in a note.
This comes amid steady production increases by the OPEC+ oil producing cartel, underscoring the oversupply scenario.
Meanwhile, U.S. crude inventories fell by 370,000 barrels in the week to June 6, according to data released by the American Petroleum Institute on Tuesday.
The decline was in contrast to analysts' expectations for a 700,000-barrel increase. The API data is closely watched as a precursor to the official weekly report from the U.S. Energy Information Administration, due on Wednesday.
Source: Investing.com
