US Trade Negotiations China Boosts World Oil Prices

Illustration of oil refinery (pixabay)

JAKARTA - The price of crude oil rose from the previous day's decline. News that the United States (US) and China agreed to conduct trade negotiations became the main sentiment driving oil prices.

Brent crude futures closed up 48 cents, or 0.7%, to US$65.34 per barrel. US West Texas Intermediate crude closed up 52 cents, or 0.8%, at US$ 63.37 per barrel.

"If we stay away from the big trade threshold, it will increase the expectations of oil demand both in the US and in China," said senior analyst at Price Futures Group, Phil Flynn.

US President Donald Trump said on his social media that his meeting with Chinese President Xi Jinping would focus on trading to produce very positive results. "We are in excellent condition with China regarding trade deals," Trump said.

On the other hand, geopolitical events and forest fires in Canada have threatened oil production and provided support to prices, although the market has the potential to oversupply in the second half of this year due to an increase in OPEC+ production.

To reduce price increases, Saudi Arabia, the world's largest oil exporter, cut prices for Asian crude oil buyers to nearly the lowest level in two months. Saudi price cuts followed OPEC+ last weekend's move to increase production by 411,000 barrels per day for July.

Saudi Arabia's strategy, the de facto OPEC leader, as a way to eliminate excess production is to cut production by 2.2 million barrels per day between June and the end of October, in a bid to reclaim market share.