NEW YORK: Oil prices closed almost 2 per cent up on Friday, marking their first weekly increase since mid-April, as a U.S. trade agreement with the United Kingdom boosted investor confidence ahead of discussions between high-level officials from Washington and Beijing. Brent crude futures increased by $1.07, or 1.7 per cent, closing at $63.91 per barrel, whereas U.S. West Texas Intermediate crude futures went up $1.11, approximately 1.9 per cent, to close at $61.02. From week to week, both indices increased by more than 4 per cent. On Friday, U.S. President Donald Trump stated that China ought to allow access to its market for the U.S., asserting that an 80 per cent tariff on Chinese products "feels appropriate," following his announcement of a deal to reduce tariffs on British car and steel exports, along with other arrangements with the United Kingdom.
"Energy markets, despite their recent bearish trend, are starting to shed some of the negativity and embracing the renewed optimism in the broader market as advancements in trade relations have commenced," stated Alex Hodes, oil analyst at brokerage StoneX. The UK deal and Trump's remarks regarding China have sparked optimism for comparable agreements between Washington and Beijing. U.S. Treasury Secretary Scott Bessent was scheduled to meet with China's leading economic official, Vice Premier He Lifeng, in Switzerland on May 10. The existing U.S. tariffs on imports from China are set at 145 per cent. "Though excessively high, the calculations can't be dismissed ..." "80 per cent is significantly lower than 145 per cent," Hodes informed clients.
Chinese exports increased more rapidly than anticipated in April, while imports lessened their drop, according to customs data released on Friday, providing Beijing with some comfort before the negotiations. Increased tensions in the Middle East also pushed up oil prices this week, stated Nikos Tzabouras, senior market analyst at the trading platform Tradu. Israel's military reported that it had intercepted a missile fired from Yemen targeting its territory, shortly after Oman facilitated a ceasefire between the U.S. and Yemen's Houthis, who took responsibility for the attack on Friday. Nevertheless, the forecast for oil prices stays unclear and will primarily hinge on the path of the U.S. economy, its trade policies, and the implementation of sanctions on Iran and Russia, noted Marcus McGregor, head of commodities research at asset management firm Conning.
On Thursday, the U.S. sanctioned a third independent Chinese oil refinery for buying Iranian crude, just before a fourth round of nuclear discussions in Oman this weekend. Capping the rise in oil prices this week was the anticipated boost in oil production by the Organisation of the Petroleum Exporting Countries and its partners, referred to as OPEC+. A Reuters survey revealed that OPEC oil production dipped in April, as declines in Libya, Venezuela, and Iraq surpassed the planned output increase. The survey provided just the right amount of optimism to markets that were already optimistic before the U.S.-China trade negotiations, PVM analyst John Evans informed clients on Friday.
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