Oil Maintains Multi-Week High As Prospect Of China/U.S. Deal Looms

Meanwhile, conflicting views of the state of the oil market abound: File Image/Pixabay

Oil on Tuesday slid minimally but held its seven-week high as expectations grew for a trade deal between China and the U.S. – something that could inspire economic growth and crude demand in the near term.

Brent settled down 17 cents at $66.87 per barrel, while West Texas Intermediate settled down 31 cents at $64.98.

Talks between the U.S. and China continued a second full day Tuesday with expectations they could extend even further into Wednesday, with both countries pushing for a trade resolution.

But elsewhere, bearish sentiment persisted: data showed that Saudi Aramco will ship about 47 million barrels of oil to China in July, 1 million barrels less than June's allotted volume, and this caused observers to think this was a warning sign linked to the Organization of the Petroleum Exporting Countries' (OPEC) planned output increases.

ANZ senior commodity strategist Daniel Hynes said in a note, "The prospect of further hikes in OPEC supply continues to hang over the market."

Also treated with suspicion was Iran stating said it would soon make a counter-proposal for a nuclear deal, following an earlier U.S. offer that Tehran deemed "unacceptable"; few if any analysts believed the Islamic republic will agree to U.S. president Donald Trump's insistence that it cease enriching uranium.

Still, there may be a wide gulf between perceptions of the state of the market and fundamentals; Bloomberg on Tuesday noted that "The peak summer demand season is looming and markets are looking tighter: the nearest U.S. crude futures are trading more than $1 above the next month, which indicates tight short-term supplies."

For his part, Haitham Al Ghais, secretary general of OPEC, told delegates to the Global Energy Show Canada in Calgary on Tuesday that there is no peak in oil demand on the horizon and global demand could surpass 120 million barrels per day by 2050.

Al Ghais added that  OPEC's forecasts were based on the assumption that energy demand will continue to grow as the world's population rises from 8 billion to nearly 10 billion by 2050.