Oil Prices Climb as U.S.-China Trade Thaw Boosts Sentiment

Image Credit: Reuters

Oil prices are on track to post a nearly 1% gain this week, buoyed by easing tensions between the United States and China that have rekindled hopes for stronger global trade flows and energy demand.

Brent crude and West Texas Intermediate (WTI) benchmarks have both edged higher over the course of the week, supported by a modest rebound in sentiment following signs of diplomatic progress between the world’s two largest economies. The easing of trade friction has injected a dose of optimism into commodities markets, particularly oil, which is highly sensitive to shifts in economic activity and trade dynamics.

Analysts noted that the tone between Washington and Beijing has turned more constructive in recent days, with renewed dialogue and indications of willingness to stabilize bilateral relations. The improved mood has sparked expectations of stronger industrial activity and trade volumes, both of which typically translate into higher energy consumption.

WTI crude was last seen trading around $78 per barrel, while Brent hovered near $82, both poised to close the week in positive territory. The move upward reflects a broader shift in risk appetite as investors recalibrate expectations for global growth, spurred in part by the potential thaw in U.S.-China ties.

Adding to the bullish sentiment, the International Energy Agency (IEA) and OPEC reaffirmed their demand forecasts for the second half of the year, citing robust consumption in Asia and steady recovery in the aviation and transport sectors. Supply-side factors have also lent support, with recent production curbs by OPEC+ members helping to balance the market.

However, gains remain tempered by macroeconomic uncertainties, including concerns over inflation trajectories, interest rate policies, and ongoing geopolitical tensions in key oil-producing regions. While the U.S.-China detente has lifted short-term sentiment, traders remain cautious as the broader economic outlook continues to present mixed signals.

Looking ahead, market participants will closely monitor developments in trade diplomacy, economic data out of China and the U.S., and inventory reports for further direction. A sustained improvement in U.S.-China relations could provide a more solid foundation for energy demand growth and help stabilize oil prices in the coming weeks.

For now, oil remains underpinned by a cautiously optimistic tone, with prices on pace to notch a weekly gain on the back of improved trade sentiment and steady global demand.

 

 

 

 

Disclaimer

Derivative investments involve significant risks that may result in the loss of your invested capital. You are advised to carefully read and study the legality of the company, products, and trading rules before deciding to invest your money. Be responsible and accountable in your trading.

 

RISK WARNING IN TRADING

Transactions via margin involve leverage mechanisms, have high risks, and may not be suitable for all investors. THERE IS NO GUARANTEE OF PROFIT on your investment, so be cautious of those who promise profits in trading. It's recommended not to use funds if you're not ready to incur losses. Before deciding to trade, make sure you understand the risks involved and also consider your experience.