Oil prices experienced a modest increase for the second consecutive session on Friday, driven by signs of a potential easing of tensions in the ongoing U.S.-China trade war. Brent crude futures rose by 31 cents to $66.85 per barrel by 0650 GMT, though they were still on track for a 1.7% decline for the week. Meanwhile, U.S. West Texas Intermediate (WTI) crude gained 35 cents to $63.12 per barrel, marking a 2.4% drop for the week.
The market showed some optimism, responding to signals of de-escalation in the trade conflict between the U.S. and China, with U.S. President Donald Trump confirming that trade talks were in progress. This announcement pushed back against earlier Chinese claims that no discussions had taken place. Additionally, China is reportedly considering exempting some U.S. imports from its 125% tariffs, signaling concern over the trade war’s economic impact. Despite these positive signs, oil prices faced downward pressure due to concerns over oversupply and uncertain demand, with a stronger U.S. dollar also weighing on crude prices.
The ongoing concerns about oversupply are largely driven by the potential for further output increases from OPEC+ members. Several countries within the group have suggested that oil production could be ramped up even further in June. Moreover, geopolitical developments also played a role in the market outlook. Russian Foreign Minister Sergey Lavrov noted that the United States and Russia were making progress toward resolving the Ukraine conflict, which could eventually lead to the easing of sanctions and allow more Russian oil to enter global markets.
Despite these supply-side concerns, demand for oil has seen some improvement, particularly in the U.S., where gasoline consumption has risen, and distillate demand remains solid due to colder weather extending into April. However, demand in the first half of the month has been slower than expected, with analysts noting a shortfall of around 200,000 barrels per day compared to their earlier forecasts.
While the market is showing some positive signs due to the trade war’s potential de-escalation, the combination of oversupply concerns and uncertain demand continues to create volatility in oil prices.
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