The gains resulted from a solitary upbeat tweet from the White House: File Image/Pixabay
He may be vilified, but U.S. president Donald Trump's infamous tweets never fail to cause market momentum, and on Tuesday the suggestion of an imminent breakthrough in the U.S./China trade war caused a dramatic reversal of losses for crude, with West Texas Intermediate rising a substantial 3.8 percent.
WTI rose $1.97 to settle at $53.90 per barrel, while Brent gained $1.20, or 2 percent, to settle at $62.14 per barrel.
However, it should be noted that just as the past weeks' crude price losses were based largely on sentiment in the form of fears of a global economic downturn and waning demand, Tuesday's gains were equally driven by an event sorely lacking in specifics.
Gene McGillian, VP of market research, Tradition Energy
Right now, this is a rumour-driven market
Specifically, Trump tweeted, "Had a very good telephone conversation with President Xi Jinping of China; we will be having an extended meeting next week at the G-20 in Japan, [and] our respective teams will begin talks prior to our meeting."
Gene McGillian, vice president of market research at Tradition Energy, lamented that "Right now, this is a rumour-driven market; there's the expectation that if you are able to reach a trade resolution, it would help global economic growth and therefore oil demand."
Oil prices had been falling by over 15 percent from April's 2019 highs due to the trade war and disappointing economic data.
Media also reported on Tuesday that after two consecutive weeks of unexpected builds, U.S. crude stocks were forecast to have dropped by 2 million barrels last week, according to analysts polled by Reuters.
This would presumably contribute to the price gains, but unfortunately the analysts polled by Reuters have a long and consistent track record of being proven wildly incorrect when the raw data comes in.
As for the other geopolitical issue that has caused consternation in the analytical community - the attacks last week on the two oil tankers in the Gulf of Oman - Trump on Tuesday shrugged off its significance as "very minor".
He also dismissed the fear in many media circles that a war between the U.S. and Iran could result from the attacks: "Other places get such vast amounts of oil there," he told Time magazine, referring to major importers of crude such as China and Japan.
Trump added, "We get very little; we have made tremendous progress in the last two and a half years in energy.…so we're not in the position that we used to be in in the Middle East where … some people would say we were there for the oil."