Flip Flop Crude Trading Suddenly Favours U.S./China Talks, Prices Escalate 3%

Meanwhile, global refiners report solid Q1 showings despite bearish market: File Image/Pixabay

 

 

Less than a day after oil traders caused crude prices to drop based on the contention that upcoming trade talks between the U.S. and China won't result in a resolution of differences, on Thursday they were suddenly optimistic about a breakthrough – and caused a 3 percent rise in the commodity.

Brent settled up $1.72, or 2.8 percent, at $62.84 per barrel, while West Texas Intermediate settled up $1.84, or 3.2 percent, to $59.91.

The reason traders looked favourably towards the U.S./China negotiations was because the U.S. and the United Kingdom on Thursday announced a trade framework that would fast track U.S. items through customs and reduce barriers on billions of dollars of industrial goods.

U.S. treasury secretary Scott Bessent will meet with China's top economic official on May 10 in Switzerland.

Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, seemed to appreciate the loopy sentiment governing trading of late by stating, "The real driver of risk assets today appears to be renewed optimism around progress in the US–China trade talks," and then she added, "It's also worth noting that sentiment toward crude remains overwhelmingly bearish."

In the meantime, sources with knowledge of the matter told media on Thursday that U.S. president Donald Trump's pressure on Iran to agree to a nuclear deal by sanctioning independent Chinese refiners is resulting in hurdles to receive Iranian crude and deterring other teapot refiners from buying crude from the Islamic republic.

Also on Thursday and despite rampant bearish sentiment, Reuters reported that global refiners have posted strong first quarter earnings despite dismal crude prices, with U.S. Gulf Coast refiners processing Mars crude enjoying a doubling of margins to some $16 per barrel.