Oil steady near 7-week high as investors await details on US-China trade talks

LONDON – Oil prices edged up towards a seven-week high on Wednesday as markets assessed the outcome of US-China trade talks, yet to be reviewed by US President Donald Trump.

Brent crude futures were up 9 cents, or 0.1%, to USD 66.96 a barrel at 0802 GMT, while US West Texas Intermediate crude was up 18 cents, or 0.3%, to USD 65.16.

US and Chinese officials agreed on a framework to put their trade truce back on track and resolve China’s export restrictions on rare earth minerals and magnets, US Commerce Secretary Howard Lutnick said on Tuesday at the conclusion of two days of intense negotiations in London. The two countries are the world’s largest economies and oil consumers.

Trade-related downside risk in oil has been temporarily removed, although the market reaction has been tepid as it is not clear how economic growth and global oil demand will be affected, said PVM analyst Tamas Varga.

“… I think it removes some downside risks, particularly to the Chinese economy and steadies the ship for the US economy – both of which should be supportive for crude oil demand and the price,” said Tony Sycamore, a market analyst for IG.

On the supply side, OPEC+ plans to increase oil production by 411,000 barrels per day in July as it looks to unwind production cuts for a fourth straight month.

“Greater oil demand within OPEC+ economies – most notably Saudi Arabia – could offset additional supply from the group over the coming months and support oil prices,” said Capital Economics’ analyst Hamad Hussain in a note.

Later on Wednesday, markets will be focusing on the weekly US oil inventories report from the Energy Information Administration, the statistical arm of the US Department of Energy. EIA/S

US crude oil stocks fell by 370,000 barrels last week, according to market sources who cited American Petroleum Institute figures on Tuesday.

(Reporting by Enes Tunagur in London and Katya Golubkova in Tokyo. Editing by Christian Schmollinger and Mark Potter)