Oil Prices Break 3-Day Losing Streak on Trump Trade Remarks

26/08/2019 12:02:52 Commodities

U.S. crude prices turned higher overnight on Monday, breaking a three-day losing streak as U.S. President Donald Trump claimed that China was willing to restart trade negotiations.

New York-traded West Texas Intermediate crude futures gained 57 cents, or 1.1%, to $55.33 a barrel by 7:51 AM ET (11:51 GMT), far from the intraday low of $52.98.
Brent crude futures, the benchmark for oil prices outside the U.S., rose 44 cents, or 0.8%, to $59.24, compared to the drop to $57.84 overnight.

However, prices were still around 30c a barrel lower than they were before the tit-for-tat announcements on import tariffs made by the U.S. and China on Friday.

Trump claimed earlier Monday that China had called the top U.S. trade negotiators and said it was willing to “get back to the table.”

However, Global Times editor Hu Xijin, often considered an unofficial voice for the Chinese government, denied that any such phone talks had taken place. “The two sides have been keeping contact at technical level, it doesn't have significance that President Trump suggested,” he tweeted.

Beijing’s top trade negotiator, Vice Premier Liu He, separately, stated that he didn't want further escalation and wished to solve the issues through “consultation and cooperation with a calm attitude."

Analysts suggested Trump's remarks had little actual effect in removing uncertainty over the trade issues.

“The hot-and-cold approach to negotiations continues and is creating a great deal of confusion,” Ole Hansen, head of commodity strategy at Saxo Bank, told Bloomberg, adding that his assumption was that tariffs will be raised.

However, there are also isolated signs of support for prices: on Friday, contracting firm Baker Hughes had said the number of active oil rigs in the U.S. had fallen to its lowest level since January last year, while the Commodity Futures Trading Commission showed that speculative long positions in crude oil reached their highest net level in a month.

In other energy trading, gasoline futures rose 0.4% to $1.5329 a gallon by 7:59 AM ET (11:59 GMT), while heating oil advanced 0.6% to $1.8337 a gallon.

Lastly, natural gas futures traded up 1.9% to $2.196 per million British thermal unit.