By Heesu Lee and Grant Smith
“While de-escalation and the expectation of a temporary truce in the trade war may be what is lifting sentiment and oil prices this morning, the resolution of the U.S.-China rift will take time,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London. “Economic uncertainty has not been lifted, which still leaves a fair degree of hesitancy in going long oil.”
Crude is still down around 8% this month as the trade war weighs on the demand outlook for oil. The dispute has yielded little progress after more than two years of steady escalation, and countered the efforts by the Organization of Petroleum Exporting Countries and its allies to boost prices by cutting production.
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West Texas Intermediate crude for October delivery rose as much as 69 cents to $54.33 a barrel on the New York Mercantile Exchange, and traded for $54.29 as of 11:28 a.m. London time. The contract settled 1% lower at $53.64 on Monday.
Brent for October settlement gained 65 cents, or 1.1%, to $59.35 a barrel on the ICE Futures Europe Exchange, after retreating 1.1% on Monday. The global benchmark crude traded at a premium of $5.03 to WTI.
Trump said Monday that China had “called our trade people and said let’s get back to the table.” However, on Tuesday, China’s Foreign Ministry spokesman said he was unaware of the calls, adding the U.S. decision to add new tariffs was hurtful to both sides.
Trump also signaled he was open to meet with Iranian President Hassan Rouhani and perhaps ease restrictions on the Islamic Republic that have slashed the nation’s oil exports.
The U.S. president said he’d meet Rouhani “if the circumstances were correct or were right” to discuss their standoff over the 2015 nuclear deal. He didn’t offer more details or acknowledge the political risks he’d face in trying to reach an accord. Top Iranian officials all but ruled out talks, with Rouhani saying America must lift sanctions if it wants to negotiate.