Oil rises after Trump assurance on China trade deal
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[June 23, 2020] By
Ahmad Ghaddar
LONDON (Reuters) - Oil prices rose on
Tuesday after a volatile session sparked by confusion over the status of
the U.S.-China trade deal.
Markets were unsettled by surprise comments from White House trade
adviser Peter Navarro, who said the hard-won deal was "over", though
U.S. President Donald Trump later soothed jangled nerves with an
assurance that the agreement was fully intact.
Brent crude rose 49 cents, or 1.1%, to $43.57 a barrel by 0933 GMT,
having skidded to a session low of $42.21. U.S. oil was up 48 cents, or
1.2%, at $41.21 a barrel after touching a low of $39.76.
U.S.-China relations have reached their lowest point in years since the
coronavirus pandemic that began in China hit the United States hard.
President Trump and his administration have repeatedly accused Beijing
of not being transparent about the outbreak.
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Oil prices were also supported by data showing that the historic
downturn in the euro zone economy eased again this month as businesses
resumed activity across the region.
"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," Nordic bank SEB said in a note.
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The sun is seen behind a crude oil pump jack in the Permian Basin in
Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus Mordant
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On the supply side, U.S. and Canadian oil and gas drillers have cut the number
of rigs they are operating to a record low, complicating any efforts to raise
output, even with the encouragement of higher prices.
"U.S. onshore production has now given up two full years of (volume) gains,"
said Stephen Innes, chief global markets strategist at AxiCorp.
U.S. oil rigs contracted for drilling dropped by 10 to 189 last week, their
lowest since June 2009, according to weekly data from energy services company
Baker Hughes. [RIG/U]
Bank of America (BofA) Global Research has lifted its oil price forecast for
this year. It now expects Brent crude to average $43.70 a barrel in 2020, up
from a previous estimate of $37.
(Additional reporting by Jessica Jaganathan in Singapore and Aaron Sheldrick in
Tokyo; Editing by David Goodman)
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