President Donald Trump’s announcement that the US had a trade agreement with China stoked optimism about the energy consumption prospects in the world’s two biggest economies, causing oil prices to rise 2% on Wednesday to their highest level in over two months.
At 11:35 a.m. EDT (1535 GMT), Brent oil futures increased $1.32, or 1.97%, to $68.19 a barrel. US West Texas Intermediate crude increased to $66.49, up $1.51, or 2.32%. WTI and Brent both hit their best levels in over two months.
Trump declared that the US would admit Chinese students to its colleges and institutions and that Beijing would provide magnets and rare earth materials. Trump also stated that he and President Xi Jinping must consent to the deal.
Although the market response has been muted since it is unclear how economic growth and global oil consumption will be impacted, according to PVM analyst Tamas Varga, the trade-related downside risk in oil has been momentarily eliminated.
In an interview published on Wednesday, Trump expressed a lack of confidence that Iran would consent to halt uranium enrichment under a nuclear agreement with Washington.
On Wednesday, the Energy Information Administration said that last week’s crude stocks in the United States dropped by 3.6 million barrels to 432.4 million. Analysts surveyed by Reuters anticipated a draw of two million barrels. It’s a bullish report,” said Bob Yawger, Mizuho’s director of energy futures, who also noted that motor petrol consumption started to pick up steam.
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