Following President Donald Trump’s announcement that the US had a trade agreement with China, oil prices increased 2% on Wednesday to their highest level in over two months, boosting optimism about the prospects for energy consumption in the two biggest economies in the world.
At 11:35 a.m. EDT (1535 GMT), Brent oil futures reached $68.19 a barrel, up $1.32, or 1.97%. At $66.49, US West Texas Intermediate crude was up $1.51, or 2.32%. WTI hit its highest level in over two months, as did Brent.
Trump declared that China would provide rare earth materials and magnets, and that the US would admit Chinese students to its institutions and colleges. According to Trump, the agreement is contingent upon both his and President Xi Jinping’s final approval.
According to PVM analyst Tamas Varga, the market’s response has been muted because it is unclear how the trade-related downside risk in oil would impact global oil consumption and economic development. Trump stated in an interview published on Wednesday that he was less specific Iran would consent to halt uranium enrichment under a nuclear agreement with Washington.
According to the Energy Information Administration on Wednesday, oil stockpiles in the United States dropped by 3.6 million barrels to 432.4 million barrels last week. Reuters surveyed analysts who anticipated a draw of two million barrels. According to Bob Yawger, director of energy futures at Mizuho, “it’s a bullish report,” and the demand for motor petrol started to pick up steam.
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