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Oil Makes Gains on Easing of US-China Tensions

April 5, 2018 at 15:50 by Matt Jackson

Tensions between the USA and China look to have eased slightly, allowing oil prices to head upwards and make small gains. Brent Crude was trading at $68.10 per barrel with WTI Crude trading at $63.35. Futures also rose with Brent crude for June up 27 cents (0.4%) to $68.29 and West Texas Intermediate up 20 cents at $63.57, a gain of 0.3%.

A trade rift started to form between Trump’s administration and the Chinese government when Trump announced a 25% tariff on steel and a 10% tariff on aluminum at the beginning of March. At the time, China’s Commerce Ministry said that they “resolutely opposed” the tariffs. Both countries have announced tariffs and levies on a host of products imported from the other country since the opening salvoes were fired. In the most recent round, the two sides announced that they would impose levies on approximately $50 billion of products.

Despite the trade-off becoming heated, there has been some cause for hope. Trump has allowed a period of approximately 2 months before the tariffs are levied, while China has said that the implementation of their levies will depend on the USA. It is believed that both sides will now negotiate over terms, and investors hope this means that there will be some cooling from both sides.

Stocks and commodities initially suffered on the news, but they have now rebounded as the market waits for firm news on the imposition of taxes.

The potential of easing tensions helped oil prices regain some lost ground on Thursday. Brent Crude rose 0.59% to $68.42 per barrel and WTI rose 0.36% to $63.60 per barrel Thursday 16:30 GMT. The slight oil price increase is also believed to have been driven by the news that crude inventories had fallen by 4.6 billion barrels last week; a welcome drop for traders, and one that contradicted the expected 1 million barrel rise.

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