Oil prices rallied as US President Donald Trump signaled skepticism over talks with Iran and confidence in a trade deal with China.
West Texas Intermediate rose as much as 2.6% to the highest since early April. Trump told the New York Post he's โless confidentโ about whether he can convince Tehran to agree on shutting down its nuclear program. Earlier, Iranian Foreign Minister Abbas Araghchi said a nuclear deal was โwithin reachโ and could be โachieved rapidly.โ
Further bolstering futures, US inflation data also came in below estimates, weighing on the dollar, which makes raw materials priced in the currency more appealing.
โOil prices jumped on comments from US President Trump that downplayed the potential for a near-term nuclear deal with Iran,โ said Jens Naervig Pedersen, a strategist at Danske Bank. โThe comments add to the recent sentiment boost in the oil market from progress in trade talks and potential for tighter sanctions on Russia.โ
Trump also posted on social media that a trade deal with China was โdone,โ subject to the approval of President Xi Jinping. The agreement would still see some tariffs between the two nations, he said, without elaborating. Global markets swung after the comments.
Crude has dropped this year as trade concerns hurt the appetite for risk assets, including commodities. At the same time, OPEC+ has moved to restore idled capacity at a faster-than-expected pace, boosting concerns about a glut later this year. Prices have recovered in recent sessions, supported by easing trade tensions and the outlook for summer demand.
A monthly report from the US Energy Information Administration underscored the oil market's current uncertainties. While the agency expects supply to eclipse demand by 800,000 barrels a day this year, the most since it began publishing a forecast for 2025, it also doesn't see US crude production topping last month's levels before the end of next year, a sign that lower prices are curbing some supply.
Government data released Wednesday, meanwhile, showed that US crude inventories fell 3.64 million barrels, the third straight weekly drop, bringing them the lowest since February.
Signs of market tightness have also appeared along the futures curve. Earlier this week, the February-March WTI spread flipped to backwardation โ where near-term prices are higher than longer-dated ones โ for the first time since April, with several subsequent months following suit earlier today, signaling concerns about oversupply are easing.
Prices
WTI for July delivery gained 2.6% to $66.67 a barrel of 11:44 a.m. in New York.
Brent for August settlement rose 2.2% to $68.36.
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