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Easing Tensions Between China and USA Prevent Further Oil Price Slide

March 26, 2018 at 18:16 by Andriy Moraru

Oil prices dropped below the $70 a barrel mark during Monday’s trading but losses were capped as fears of tension between the USA and China eased, while rumors of OPEC nations extending their supply deal into 2019 further helped support prices.

Brent crude opened at $70.43 a barrel, after closing above $70, on Friday, for the first time since November. However, concerns over tensions between the USA and China caused prices to slip to $69.67 a barrel before rallying back to $70.25. WTI crude stands at $65.69 a barrel as of 18:11 GMT.

The market had seen oil prices rise to close above $70 a barrel at the end of the last week. However, higher prices led to some investors taking profit, which led to prices being pegged back below the $70 mark while continued fears of a trade war between China and the USA caused further losses during early trading.

The Wall Street Journal reported on Monday that negotiations had quietly begun between the two nations, and the news pushed oil prices back up to the $70 mark and beyond. News that the Trump administration had reshuffled its national security team to include the appointment of John Bolton and national security advisor has led many to believe that the move signals Trump’s intention to pull out of the Iran nuclear deal. This would likely lead to sanctions being placed on the Iranian government, curbing global supply of oil and pushing prices up.

The expected extension of OPEC’s supply deal into 2019 has helped hold up oil prices, and there is an increase in rumors suggesting that Saudi Arabia, the primary member of OPEC, will announce that it intends to restrict supply beyond the current deadline at the end of this year, and into 2019.

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