Oil Prices Climb as U.S.-China Trade Talks Give Hope

Table of Contents

1414 GMT – Crude futures climb more than 1.5% in afternoon trade fueled by renewed optimism surrounding U.S.-China trade negotiations. Brent rises 1.5% to $66.33 a barrel, while WTI is up 1.8% to $64.53 a barrel. Both benchmarks are on track to post weekly gains of nearly 6% after President Trump and Chinese leader Xi Jinping spoke on the phone and agreed to meet soon. The news helped ease concerns about an escalating tariff conflict that could significantly hit oil demand. Meanwhile, prospects of an imminent deal between the U.S. and Iran dimmed after Tehran ordered thousands of tons of ballistic-missile ingredients from China. On the macroeconomic front, the latest data showed the U.S. added 139,000 jobs in May—a slowdown from April, but slightly above expectations. ( giulia.petroni@wsj.com )

Oil Futures On Track for Weekly Gains

0907 ET – Oil futures move higher and stay on track for solid gains in a week in which optimism about U.S.-China trade talks and lack of progress toward a Ukraine-Russia ceasefire or U.S.-Iran nuclear deal offset concerns about OPEC+ accelerating output increases. Prices get a lift after U.S. May payrolls come in higher than expected. “As long as the U.S. economy continues to outperform most other nations, nearby WTI futures could continue to act as a significant prop to the global market,” Ritterbusch says in a note. WTI and Brent are up 0.5% at $63.66 and $65.65 a bareel, respectively.( anthony.harrup@wsj.com )

OPEC+ Expected to Implement Big Output Hikes in August, September

1007 GMT – OPEC+ members are expected to agree to two large output hikes for August and September at their next meetings, according to HSBC Research. The group of oil producing countries is forecast to implement increases of 411,000 and 274,000 barrels a day, respectively, during the periods. “Our new scenario assumes regular hikes from October to December and leaves the 2.2 million barrels a day of voluntary cuts fully unwound by the end of 2025,” analysts at the bank say. Should the group instead choose to continue with accelerated hikes even after the summer, it would confirm an intention to crack down on overproduction and regain market share from U.S. shale producers, HSBC analysts say. ( giulia.petroni@wsj.com )

Oil Poised for Weekly Gain After U.S.-China Trade Talks Resume

0727 GMT – Oil prices dip in early trade but are on track for a weekly gain of more than 3% after President Trump and Chinese leader Xi Jinping agreed to further trade talks. Still, expectations the OPEC+ will agree to another large output hike to regain market share and take advantage of seasonal demand continue to hang over the market. Brent crude slips 0.6% to $64.95 a barrel, while WTI is down 0.7% to $62.95 a barrel. Traders now await the U.S. jobs report due later on Friday for more cues on the state of the U.S. economy. “Investors are bracing for potentially weak labour data following disappointing indicators earlier in the week, which could reinforce stagflation concerns and push the Federal Reserve toward a rate cut, possibly as early as September,” analysts at IG say. ( giulia.petroni@wsj.com )

Accelerated OPEC+ Production Hikes Could Lead to Bigger 4Q Surplus

0702 GMT – OPEC+ is likely to go ahead with two big production hikes in August and September, analysts at HSBC Global Research say. At its May 31 meeting, OPEC+ confirmed a production increase for July, equivalent to three monthly output increases. The analysts see the oil market as balanced in 2Q and 3Q as demand rises in the summer and peaks in July-August, matching the supply increases from OPEC+. However, accelerated hikes by OPEC+ after the end of summer could tip the market into a bigger 4Q surplus than previously forecast. “Deteriorating fundamentals after summer raise downside risks to oil prices and our USD65/b assumption from 4Q onwards,” they say. ( monica.gupta@wsj.com )