Crude oil rose on Tuesday morning after President Donald Trump said the U.S.-China trade deal was still on, with Brent gaining more than one percent to trade over $43 a barrel and WTI breaching the $40 threshold to reach $41.55 a barrel before both prices fell back.
Reuters reports that the U.S. president’s comments came on the heels of remarks by a senior Washington official who told media the deal was “over”, which rattled the market.
Thanks to these comments, oil futures spiked to their highest levels in about three months, MarketWatch reported.
The latest boost to prices also followed an improved demand outlook from Bank of America, which stabilized prices at a higher level.
“Global oil market fundamentals have shifted significantly since we last adjusted out oil prices forecast on March 8. Given the improved outlook, we lift our 2020 Brent price forecast to $43.70/bbl from $37 prior in 2020. We also increase our 2020 average WTI crude oil price forecast from $32 to $39.70/bbl,” BofA’s oil analysts wrote in a note last Friday, as quoted by MarketWatch.
The price rise was then countered by a continued increase in new Covid-19 cases in many parts of the world, which dragged prices back down. However, with China being the largest importer of crude in the world, and with the trade deal with Washington widely considered a crucial factor for sustained oil demand growth in the Asian powerhouse, the good news from Trump may well outweigh the bad news going forward. Related: Why The $17.5 Billion Write-Down Is Just The Beginning For BP
“Prices rose further on the relief that the US-China trade status remained intact and on indications that despite Covid-19 infections increasing, road fuel demand and global traffic are still standing strong,” Rystad Energy’s head of oil markets, Bjornar Tonhaugen said as quoted by MarketWatch.
“Looking at the strength of the physical market and recovering global oil demand, we think that the crude oil price is still on its way higher,” SEB bank said in a note, as quoted by Reuters.
By Irina Slav for Oilprice.com
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