Background on Key Players and Their Impact on Oil Market
The United States and China are the world’s largest consumers of oil, making their economic health a significant indicator for global oil demand and prices. Recently, both nations agreed to temporarily suspend most of the tariffs they had imposed on each other, signaling a more favorable outlook for oil demand.
Trade Tensions and Their Effect on Oil Demand
The trade dispute between the US and China had negatively affected oil demand prospects, according to John Kilduff of Again Capital. The global economic slowdown, coupled with the trade war’s impact on China—the world’s largest oil importer—has weakened oil demand.
Temporary Trade Truce Boosts Oil Prices
Both countries announced a 90-day truce on tariffs, which entered into force by May 14th. This easing of tensions has led to an increase in oil prices.
- Brent Crude: The price for North Sea Brent crude for July delivery rose by 1.64%, reaching $64.96 per barrel.
- West Texas Intermediate (WTI): The price for WTI for June delivery increased by 3.23%, reaching $61.95 per barrel.
Market Challenges Amidst the Oil Price Increase
Despite the rise in oil prices, analysts like John Kilduff warn that the market still faces significant headwinds. One major challenge is the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, which continue to add more barrels to the market than anticipated.
