Oil prices climbed more than 1 percent on Friday, for their first weekly gain since the middle of April. That came after a week of market strain due to worries about soft demand and swelling U.S. stockpiles. But sentiment reversed when a new U.S.-UK trade deal brought renewed hope. Now, investors are considering crucial trade talks between American and Chinese officials.
Brent crude rose 98 cents, or 1.6 percent, to $63.82 a barrel by 2:03 p.m. Eastern time. U.S. West Texas Intermediate (WTI) crude jumped $1, or 1.7%, to $60.91. For the week, both benchmarks are on pace to end up more than 4%.
The oil market had been on a rough run lately, sliding for three consecutive weeks due to weak economic data and oversupply fears. However, the situation reversed when former President Joe Biden of the United States announced a deal with Britain to reduce tariffs on car and steel exports. The decision inspired hopes that progress could be made in other areas of global trade.
“Energy markets—as bearish as they’ve been—are finally casting off the gloom and converging with broader market optimism,” said Alex Hodes, energy analyst at brokerage StoneX.
The United States is also working for stronger trade links with China. Biden suggested that an 80 percent duty on Chinese goods, compared with 145 percent now, “seems right.” Although the duty remains high, the language indicated a potential shift toward easing restrictions, which markets interpreted as a bullish sign.
China announced stronger-than-expected export growth for April on Friday. Imports, too, shrank less than expected, a sign of elasticity in its economy as it enters trade discussions. U.S. Treasury Secretary Scott Bessent is scheduled to hold talks with Chinese Vice Premier He Lifeng in Switzerland on May 10.
Oil prices also received another boost from geopolitical tension in the Middle East. An indefinite truce between the U.S. and Yemen’s Houthi rebels came just days after two missile launchings from Yemen were intercepted by Israel, with Oman brokering a ceasefire. The Houthis claimed ownership of the intercepted missile.
At the same time, the U.S. slapped sanctions on a third Chinese independent refinery for buying Iranian crude. It also coincides with new nuclear talks due to take place in Oman over the weekend. The moves were a sign of stepped-up enforcement of oil trade rules, increasing pressure on global supply chains.
The recent spike in price, however, has done little to remove the headwinds facing the oil market. OPEC+ is widely anticipated to increase output in the months ahead. Yet a Reuters poll showed OPEC’s oil output fell in April. Decreases in Libya, Venezuela, and Iraq surpassed the group’s intended increase.
Clean energy is still a long-term theme, but the oil markets are clearly finding their footing. Changes in world trade and geopolitical dynamics are taking the lead for now.
