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Easing Tensions Leads to Oil Rebound

April 10, 2018 at 15:45 by Matt Jackson

Soothing words from Chinese President Xi Jinping has led to a cooling off of the potential trade war between the USA and China, leading to oil prices regaining a lot of the ground they lost last week. Brent crude pushed above $70 as a result of the news. It was trading at $70.37 per barrel at 16:00 GMT, a rise of 2.51%. WTI crude reached $65.05, which represents an increase of 2.57% on the previous day’s trading.

The tension between the two nations has dominated commodity news in recent days, although the USA have also become embroiled in a spat with Russia, imposing sanctions against Russian companies and businessmen, and they are now caught up in potential action against Syria, too.

Trump had earlier complained that China’s proposed 25% tariffs on imported cars was 10 times higher than had been assessed by US officials. He described it as “STUPID trade”.

Although the announcement by Xi has been positively received by the market, most of the news has previously been announced. There were no new concessions to Trump, so while tensions may have eased for the time being, there is still the potential for the war of words to heat up further in the future.

Xi said, on Tuesday, that it was his administration’s aim to open the country’s economy and low import tariffs. Although there has been no response from Trump, or his aides, the market has reacted positively to the news. Share prices and commodities like oil rose, while investments that are seen as a safe haven, including gold, have dipped.

Oil has made significant gains over the past two days and reached its highest peak since March during the day’s trading. Prices now stand just 1% below 2018’s peak price of $71.05, and if Trump reacts as positively to Xi’s words as the market has, then it looks likely that oil will have a new high for the year.

If you have any questions and comments on commodities today, use the form below to reply.

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