Oil prices are on track to post a weekly gain amid expectations that the first U.S. trade deal post-tariffs, with the UK, could be a good sign of thaw in the tense trade relations ahead of the U.S.-China talks this weekend.
As of 9:45 a.m. EDT on Friday, the front-month U.S. benchmark futures, WTI Crude, were up by 0.92% at $60.42. The international benchmark, Brent Crude, was rising by 0.80% at $63.31.
After posting a weekly loss last week, oil was on track early on Friday for a weekly gain this week, after the U.S. and the UK announced on Thursday a trade deal. U.S. President Donald Trump announced the landmark U.S.-UK trade deal, calling it a “breakthrough” with one of America’s “most cherished allies.” The agreement is set to drive billions of dollars in export opportunities for both nations. Under the agreement, the U.S. will eliminate its 25% tariffs on UK steel and aluminum imports, easing costs for British manufacturers.
With one deal done, the market will now be watching the beginning of tentative trade talks between the United States and China, scheduled to start in Geneva, Switzerland, on Saturday.
U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer will meet China’s Vice-Premier He Lifeng in Geneva.
Trade tensions have somewhat cooled before the trade talks, and the commodities sector has taken notice.
“Following a challenging April the commodities sector has been finding its feet again, with early May action driving a 1.4% gain, led by pro-cyclical and growth-dependent sectors,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said in a commentary on Friday.
Risks of a slowdown in the U.S. shale patch have also supported oil prices this week.
“Sub-$60 WTI threatens profitability, with top producers cutting spending and signs that production growth is stalling,” Hansen noted.
Yet, the upside to oil prices is being capped by the OPEC+ plan to continue boosting production by more than previously expected.
By Charles Kennedy for Oilprice.com
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