Oil ticked higher, rising for a fourth straight day, on investor optimism around extended trade talks between the US and China, and signs of near-term tightness in the physical market.
Global benchmark Brent rose above $67 a barrel, while West Texas Intermediate topped $65. US Commerce Secretary Howard Lutnick said that initial discussions in London with officials from Beijing had been “fruitful”. The negotiations are slated to continue on Tuesday.
Crude has declined this year on fears that persistent global trade tensions will sap economic growth and crimp energy demand, although progress in the latest US-China talks could ease such concerns and buoy risk assets. Oil has also been hurt as the OPEC+ alliance agreed to add production back to the market at a faster-than-expected clip, spurring forecasts for a glut.
“Crude has preemptively priced in a degree of success in the US-China trade talks,” said Vandana Hari, founder of Vanda Insights in Singapore. “We may not know the outcome for another day, and I expect prices to go into a holding pattern until then.”
Oil's pricing structure points to near-term tightness, although the reverse is the case further out. Brent's prompt spread is 81 cents a barrel in backwardation, a bullish pattern, with the nearest contract trading at a premium to the next in sequence. That's up from 48 cents about a month ago.
On the geopolitical front, President Donald Trump expressed concern that Iran was seeking too much in a potential nuclear deal, including the ability to enrich uranium. He described the Iranian negotiators as tough but good. Talks will continue on Thursday, according to Trump.
Prices:
Brent for August settlement rose 0.3% to $67.27 a barrel at 2:22 p.m. in Singapore.
WTI for July delivery added 0.3% to $65.47 a barrel
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