Oil Steadies As Traders Eye Next Moves In US-China Trade Tumult

OPEC+ has added to the bearish headwinds by ramping up idled oil production, stoking fears of oversupply. (Photo Source: Bloomberg)

Oil was little changed as China considered suspending tariffs on some US imports, though conflicting messages on trade raised uncertainty about the prospect for easing tensions.

Brent traded below $67 a barrel and headed for a weekly decline, while West Texas Intermediate was near $63. Chinese authorities are weighing removing additional levies on a number of products including ethane, according to people familiar with tha matter, as economic costs mount for certain industries. Shares in China's top buyers of the fuel from the US jumped.

Still, the outlook for an agreement on trade between the US and China appears far off. President Donald Trump said Thursday that his administration was talking with China about trade, despite Beijing earlier denying the existence of negotiations and demanding that unilateral tariffs be revoked.

Oil has dropped sharply this month on concerns that Trump's sweeping tariffs and retaliatory measures from trading partners including China will cripple economic activity and throttle energy demand. In an effort to reassure US oil firms, Energy Secretary Chris Wright said that the trade turmoil will be fleeting and the administration fully supports more crude output.

“We see strong support for Brent in the $60-$64 range,” said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management. “With the stabilization of financial markets we may quietly return to the $70 level here in the second quarter.”

OPEC+ has added to the bearish headwinds by ramping up idled oil production, stoking fears of oversupply. The group will meet on May 5 to discuss its output plans for June.

Still, some metrics are pointing to near-term strength in the oil market. The prompt spreads for global benchmark Brent and WTI have widened this month in a bullish backwardation structure, signaling tight supply.

Prices:

Brent for June settlement fell 0.2% to $66.39 a barrel at 10:13 a.m. in London.
- Futures are down 2.3% this week.
WTI for June delivery dropped 0.1 at $62.64 a barrel.