Oil prices continued their upward movement on Friday after rising about 3 percent in the previous session, as trade tensions between top oil consumers U.S. and China, showed signs of easing and Britain announced a “breakthrough” trade deal with the United States.
As of 5:05 GMT, Brent crude futures gained 0.46 percent to $63.13, while U.S. West Texas Intermediate crude futures rose 0.50 percent to $60.21. On Thursday, both contracts settled nearly 3 percent higher.
Optimism around U.S.-China trade talks supports market
U.S. Treasury Secretary Scott Bessent will meet with China’s Vice Premier He Lifeng in Switzerland on May 10 to work toward resolving trade disputes that have threatened oil demand growth. If the outcomes of the meeting were positive, oil prices are expected to witness a major rise.
The two countries are the world’s largest economies and the impact of their trade tensions was expected to lower crude consumption growth. Despite signs of easing tensions, analysts cautioned that the recent tariff-driven volatility in the oil market was not over yet.
While the Trump administration has indicated its willingness to engage in trade discussions with China this week, Trump stated that he is unwilling to reduce his 145 percent tariffs on Beijing. China has also suggested that the talks taking place this week were primarily at the request of the U.S.
China’s exports rose faster than expected in April, while imports narrowed their declines, customs data showed on Friday, giving Beijing some relief ahead of ice-breaker tariff talks with the U.S. this weekend.
In another trade development, U.S. President Donald Trump and British Prime Minister Keir Starmer announced a “breakthrough deal” on trade that leaves in place a 10 percent tariff on goods imported from the U.K. while Britain agreed to lower its tariffs to 1.8 percent from 5.1 percent and provide greater access to U.S. goods.
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OPEC+ plans output increase
On the supply front, the Organization of the Petroleum Exporting Countries and allies (OPEC+) plan to increase output, which could keep a lid on oil prices. A Reuters survey found OPEC oil output edged lower in April as production declines in Libya, Venezuela and Iraq outweighed a scheduled increase in output.
Tighter U.S. sanctions on Iran could also restrict supply and push oil prices higher. Sanctions on two small Chinese refiners for buying Iranian oil made it difficult for them to receive crude and led them to sell their product under alternative names, sources told Reuters on Thursday.
Analysts at Citi Research lowered their three-month price forecast for Brent to $55 per barrel from $60, but maintained their long-term forecast of $60 a barrel this year. They added that a U.S.-Iran nuclear deal could drive Brent prices down toward $50 per barrel on increased global supply, but without a deal, prices could rise to over $70.
