US-China Trade Optimism Supports Oil Price Forecast
Oil prices are finding firm footing as markets await the outcome of trade talks between the U.S. and China, which resumed in London for a second day. Comments from President Donald Trump, saying negotiations were progressing well, helped bolster sentiment. A successful agreement is expected to improve the global economic outlook, lifting demand for crude and other commodities.
Monday saw Brent hit $67.19—its highest since late April—helped by a weaker U.S. dollar, which dropped 0.3% on the DXY index. The decline made crude more attractive for buyers using other currencies. WTI also posted a strong 6.2% gain last week, with much of the move attributed to improving trade expectations and favorable U.S. jobs data, according to Goldman Sachs.
Saudi Aramco Export Cuts Raise Questions on OPEC+ Output Plans
Adding to bullish sentiment, Saudi Aramco is set to reduce July crude exports to China by 1 million barrels compared to June, despite OPEC+ announcing a 411,000 barrels per day production increase for the same month. This move challenges assumptions that the cartel’s phased supply hike would flood the market.
“After all these unwinds, one would have thought that we would be getting more from Saudi Arabia,” said Onyx Capital Group’s Harry Tchilinguirian, hinting that output restraint may persist informally.
A Reuters survey showed that OPEC output rose by just 150,000 bpd in May to 26.75 million bpd. Iraq’s compensatory cuts and moderate increases from Saudi Arabia and the UAE meant total additions were limited.
Iran Nuclear Deal Uncertainty Caps Bullish Momentum
Geopolitical risk from Iran remains on the radar. Tehran is preparing a counter-proposal to the U.S. on a nuclear agreement, but differences over uranium enrichment persist. Easing sanctions on Iran could reintroduce barrels into the market, tempering the bullish tone.
