Oil prices fluctuate before important talks
9 June 08:46
On Monday morning, oil prices fell slightly, but retained most of last week’s gains as investors keep an eye on trade talks between the US and China, which are due to take place later today. The market is supported by hopes that a potential deal could improve the global economic outlook and increase demand for fuel, "Komersant Ukrainian" reports citing Reuters.
Current price situation
According to OilPrice.com, as of 08:33 Kyiv time, futures for Brent crude oil fell by 4 cents to $66.43 per barrel. U.S. West Texas Intermediate (WTI) fell 3 cents to $64.55 per barrel.
Prospects for a trade deal between the US and China have increased some investors’ appetite for risk and supported oil prices ahead of a meeting between three senior officials of the Donald Trump administration and their Chinese counterparts at the first meeting of the US-China Economic and Trade Consultation Mechanism.
A week of growth after a long decline
Last week, Brent crude rose by 4% and WTI by 6.2%, the first weekly increase in three weeks after news that the two countries were discussing their trade differences.
“Brent crude gained momentum, approaching the upper end of its recent trading range over the past week, driven by buying spurred by rising risk appetite in equity markets as tariff fears eased,”
– said Tim Evans of Evans Energy.
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Diplomatic efforts and economic pressures
The announcement of the meeting on Saturday followed a rare phone call on Thursday between Trump and Chinese President Xi Jinping. Both leaders are under pressure to reduce tensions as Chinese export restrictions on rare earth metals disrupt global supply chains.
The US employment report, which showed that unemployment remained stable in May, increased the chances of the Federal Reserve cutting interest rates, which also supported growth last week.
China’s economic challenges
In China, export growth slowed to a three-month low in May due to U.S. tariffs hitting supplies. At the same time, deflation at the producer price level deepened to its worst level in two years, putting pressure on the world’s second largest economy on both the domestic and external fronts.
The data also showed that China’s crude oil imports fell in May to the lowest daily level in four months as state-owned and independent refiners underwent extensive scheduled maintenance.
US oil market
WTI’s discount to Brent is also narrowing due to a combination of increased OPEC production, moderate growth in US crude oil supplies and the potential for lower production next year, ING analysts led by Warren Patterson said.
The U.S. benchmark strengthened due to supply concerns after wildfires disrupted production in Canada, as well as strong demand for U.S. fuel during the summer driving season.
The number of active U.S. oil wells, an early indicator of future production, fell by nine to 442 last week, energy services company Baker Hughes reported on Friday.
Analysts’ outlook and forecasts
The prospects of a Sino-US trade deal that could support economic growth and boost oil demand outweighed concerns about OPEC supply increases after the group announced on May 31 another significant production increase for July.
HSBC expects OPEC to accelerate supply increases in August and September, likely raising downside risks to the bank’s forecast of $65 a barrel for Brent crude from the fourth quarter of 2025, it said in a research note on Friday.
Researchers at Capital Economics said they believe this “new faster pace of (OPEC) production increases is here to stay.”
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