Oil breaks above $70 a barrel as shadow of trade war recedes

by Ben Pena April 11, 2018, 5:00
Oil breaks above $70 a barrel as shadow of trade war recedes

Oil markets stabilised on Monday after slumping around 2 percent last Friday on concerns over an intensifying trade dispute between the United States and China, as well as increased USA drilling activity. Gold edged up to $US1,343 an ounce, but oil jumped more than 3% to the highest level since December 2014 for the key Brent global indicator.

West Texas Intermediate for May delivery rose as much as $1.41 to $64.83 a barrel on the New York Mercantile Exchange, and was at $64.46 as of 8:48 a.m. local time.

"This has been another huge day", said Bill Baruch, president of Blue Line Futures in Chicago.

Both the WTI and the Brent benchmarks were trading up on Tuesday by nearly 3 percent, with Brent reaching the psychologically important $70 threshold shortly after 9:00am EST.

Both have erased their losses from last week, when concerns over a possible trade war between the two largest economies contributed to declines of more than 4 percent.

Global markets were trading in positive territory today after China's President Xi Jinping vowed to continue opening the Chinese economy in a speech today, which bolstered oil prices.

The president met with military officials in the White House Monday to discuss the administration's response to an alleged chemical weapons attack carried out by Syrian President Bashar Assad 's government against its own people.

Why would Israel launch strikes on Syria?
Trump yesterday promised a rapid decision on action, as "we can not allow atrocities like that". The U.S. military has a wide range of warplanes and other capabilities in the Middle East.

"Oil markets are getting a bounce on increasing speculation about Trump and Syria", Streible said.

Departures from the accord would result in renewed sanctions against Iran, which would hurt its oil industry.

Geopolitical concerns elevated crude prices on Tuesday after President Donald Trump canceled his scheduled trip to multiple South American countries to focus on the USA response to developments in Syria. The dollar fell against a basket of major currencies, hitting its lowest in almost two weeks.

Oil prices also traded higher Tuesday amid a report from Bloomberg News, which said that Saudi Arabian officials were seeking $80 a barrel on Brent crude to support the valuation of its energy giant, Aramco, before its initial public offering. Because oil is dollar-priced, a stronger greenback makes purchases in other currencies more expensive.

The American Petroleum Institute (API) is set to release oil inventory figures later this day, while the Energy Information Administration is due to present on Wednesday.

Gasoline stocks fell by 1.1 million barrels, compared with analysts' expectations for a 1.3 million barrels drop.

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