Oil prices rose on Monday after reaching a five-month low in the previous session, as investors hoped that potential talks between the US President and the Chinese leader could ease trade tensions between the world's two largest economies and oil consumers, Reuters reports, writes UNN.
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Brent crude futures rose 92 cents, or 1.47%, to $63.65 a barrel by 04:08 GMT (07:08 Kyiv time) after falling 3.82% on Friday to their lowest since May 7. US West Texas Intermediate crude futures were at $59.79 a barrel, up 89 cents, or 1.51%, after falling 4.24% to their lowest since May 7. WTI crude prices will settle on Tuesday as Monday is a public holiday in the US.
"The recovery in oil markets was likely driven by profit-taking, as traders bet on a so-called 'TACO' deal after Trump and Vice President J.D. Vance indicated that recently announced tariffs are more of a negotiating tool and they are ready to strike a deal with China," said independent analyst Tina Teng, referring to the empirical trading rule that "Trump always backs down."
"However, volatility (in prices) is expected. I don't expect oil or other risky assets to make up for losses anytime soon," she added.
Trade tensions between the US and China escalated last week after China tightened controls on rare earth exports, prompting a response from US President Donald Trump on Friday, who proposed imposing 100% tariffs on Chinese exports to the US, as well as new export restrictions on "any critical software" by November 1.
These moves come ahead of a potential meeting between Trump and Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation forum in South Korea, which US Trade Representative Jamieson Greer said could still happen later this month.
"The most likely scenario is for both sides to back away from their most aggressive policies, and negotiations will lead to a further - and possibly indefinite - extension of the pause in tariff increases achieved in May," Goldman Sachs analysts noted.
However, the risk of escalating trade tensions remains, which could lead to higher tariffs or more severe export restrictions, at least temporarily, they added.
Oil prices fell sharply in March and April amid peak trade tensions between the two countries.
Customs data showed that China's crude oil imports in September rose 3.9% year-on-year to 11.5 million barrels per day, as refineries operated at maximum capacity this year and inventory building continued.
Regarding the Middle East, Trump announced on Sunday the end of the war in the Gaza Strip, heading to Israel ahead of the release of Israeli hostages and Palestinian prisoners as part of the fragile ceasefire he brokered.