Oil Achieves 4% Weekly Gain On Hope Of U.S./China Breakthrough

Even a slight thaw would be beneficial to demand, says experts: File Image/Pixabay 

Even though the U.S./UK trade deal agreed upon this week is of minimal significance globally, crude traders regarded it as a harbinger of positive outcomes in the upcoming trade negotiations between the U.S. and China – and as such, oil prices on Friday contributed to the first weekly gains since mid-April.

For the day, Brent settled up $1.07 at $63.91 per barrel, while West Texas Intermediate settled up $1.11, at $61.02.

Week-over-week, both benchmarks gained over 4 percent.

Friday's optimism amid a chronic run of bearish sentiment seemed to derive from U.S. president Donald Trump stating that an 80 percent tariff on goods from China "seems right" (compared to the triple digit percentages he had previously announced).

The brash billionaire, riding high on his tariff deal earlier in the week with the UK, added that China should open its market to the U.S., which also seemed to buoy sentiment in the oil market.

Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, said, "WTI breaking back above $60 has likely triggered short-covering from newly established positions."

Bloomberg seemed to be the only agency that could offer a more sceptical view of geopolitical developments: "While Trump hailed the pact with the UK as historic, specifics of the deal indicated it fell short of the 'full and comprehensive' agreement he had promised," it stated, adding, "And even though Trump said negotiations with China would result in tangible progress, Beijing reiterated on Thursday its call for the US to cancel tariffs ahead of talks."

Still, pundits preferred to regard Washington and Beijing's rendezvous as a "better than nothing" proposal: Oilprice.com stated, "As the world's top two oil consumers, any thaw in trade relations could provide much-needed demand support; analysts flagged improved investor sentiment tied to hopes of reduced tariffs, though warnings persist that volatility from tariff headlines will continue to impact price action."