Oil rose as producers’ promises to keep output growth in check added to signs of the physical market’s strength and a potential easing in trade tensions between the US and China.
West Texas Intermediate futures climbed 0.8% to settle near $63 a barrel, while Brent advanced to close around $66.50, after President Donald Trump said that US officials have been holding meetings with Chinese officials on trade as recently as this morning. That countered some pessimism over the major crude importer’s earlier comments that the US should revoke all unilateral tariffs and its dismissal of speculation that progress has been made in bilateral communications.
Those developments followed signs in recent days that lower oil prices are starting to curtail some producers’ spending plans. Already, metrics are pointing to a bullish near-term market, with the prompt spread for WTI hovering near the strongest in more than two months, an indication of tight supplies.
Geopolitical tensions remain hot as well. Russia hit Ukraine with a barrage of missiles and drones overnight, killing at least nine people in the capital, as peace talks stalled over President Volodymyr Zelenskiy’s vow never to recognize Russian sovereignty over Crimea. The US is set to demand that Russia accept Ukraine’s right to maintain a military force.
At one point, crude dipped into negative territory after Axios reported that Iran asked White House envoy Steve Witkoff whether the sides should negotiate an interim deal, potentially decreasing the risk of reduced flows from Tehran.
Oil has dropped sharply this month on concerns that US tariffs and counter-levies from its biggest trading partners will dent economic activity and hurt energy demand. Growing strain within OPEC+, particularly with perennial overproducer Kazakhstan, has stoked fears that output will continue to rise at a faster-than-advertised pace over the coming months. The Organization of the Petroleum Exporting Countries and its allies will hold a meeting on May 5 to decide what to do in June.
“Slower US production growth could help counter the expected acceleration in OPEC+ production unwinds,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. Still, uncertainty surrounding the cartel will “likely keeps any rally in check and pose downside risks in the event that economic data starts to soften.”
Oil Prices:
WTI for June delivery rose 0.8% to settle at $62.79 a barrel in New York.
Brent for June settlement added 0.7% to settle at $66.55 a barrel.
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