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Crude oil futures were largely stable during mid-morning trade in Asia Tuesday after US President Donald Trump`s comments about the possibility of a trade deal with China.
At 10:40 am Singapore time (0240 GMT). July ICE Brent crude futures inched up 6 cents b (0.09%) from Monday`s settle to $70.29 b. while the NYMEX June light sweet crude contract ticked up 9 cents b (0.15%) to $61.13 b.
Trump on Monday said that he would meet with Chinese President Xi Jinping next month at the G20 summit.
`Crude prices are inching up this morning. most likely in response to the latest comments from Trump about expecting a `very fruitful` meeting with Xi during the G20 summit. He also said late Monday that he has not pulled the trigger yet on the 25% additional import duties the US threatened to impose against China last week.` said Vandana Hari. founder of Vanda Insights.
Escalating trade tensions between US and China still paint a bearish outlook among market participants on global growth and energy demand.
China will increase tariffs on $60 billion of products imported from the US. in response to the White House raising tariffs on $200 billion worth of Chinese goods last week. the State Council under the Finance Ministry said in a statement Monday.
China will increase tariffs on US LNG imports to 25% from 10% effective June 1. but has left out US crude imports from its tariff list. according to the statement.
`Sentiment is likely to stay weak as trade tensions escalate.` ANZ analysts said in a note Tuesday.
Meanwhile. global supply tightness continues to provide support for crude prices. analysts said.
Saudi Arabia said two of its oil tankers were victims of a `sabotage attack` on Sunday off the coast of the eastern UAE port of Fujairah. while market sources identified the other vessels as UAE-flagged and Norwegian-flagged.
No one has claimed responsibility for the attacks. which resulted in no injuries or chemical spills. but were being treated as a `serious development.` the UAE foreign affairs ministry said.
`This attack raises the stakes for oil and will add more volatility. Yes. trade war concerns can have an impact on demand down the road. but geopolitical events can impact oil supply now. This is very true especially against the growing threat from Iran.` said Price Futures Group senior market analyst Phil Flynn.
`Geopolitical uncertainties continue to inflict marked volatility on oil prices.` said Benjamin Lu. investment analyst at Phillip Futures.
Commercial crude stocks in the US likely fell by 2.3 million barrels for the week ended May 10. according to analysts surveyed Monday by S&.P Global Platts. In refined products. analysts were looking for US gasoline inventories to have risen by 750.000 barrels last week. and distillate stocks to have increased 440.000 barrels.
