Oil prices picked up later in afternoon trading on Thursday after US President Donald Trump suggested that the United States may not raise tariffs on Chinese goods after all, according to Reuters.
Trump announced on Thursday that he received a "beautiful" letter from China's president that suggested that China and the United States "work together" to reach a deal over trade between the two nations.
The trade war that has continued to linger in uncertainty looked over the weekend like it would result in an increase in tariffs yet this week, pushing oil prices down as higher tariffs would likely eat away at Chinese demand for crude oil.
On Monday, crude oil prices fell as President Trump lashed out over Twitter, saying that "the trade deal with China continues, but too slowly, as they attempt to renegotiate. No!" At the time, President Trump threatened to raise the current 10% tariff to 25% on $200 billion worth of goods that do not include high tech goods, which are already assessed at 25%.
This uncertainty has created volatility and therefore opportunity in the oil trade, along with various other market stressors, such as sanctions on Venezuela and Iran, and production supply outages in Libya and most recently, oil export issues in Russia.
Unless a deal is reached, the higher tariff will go into effect on Friday, which would likely see China respond with a retaliatory tariff of their own. Further muddying the oil waters, China is giving every indication that it plans to continue to purchase Iranian oil despite the US sanctions, and is also continuing its relationship with sanctioned-Venezuela.
At 4:02pm EST on Thursday, WTI crude was trading down $0.58 (-0.93%) at $61.54 on the day with Brent trading down $0.24 (-0.34%) at $70.13 on the day.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More
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Comments
Contrary to the uncertainty in this article, the tariff has been imposed. This makes the claim of breaking news even more laughable.