Oil prices recovered some ground on Monday after falling to their lowest levels in five months during the previous session, with traders pinning hopes on potential talks between the U.S. and Chinese presidents that could ease tensions between the world’s two largest economies and energy consumers.
Brent crude futures rose 92 cents, or 1.47%, to $63.65 a barrel by 06:22 GMT, rebounding from a 3.82% drop on Friday — its lowest close since May 7. U.S. West Texas Intermediate (WTI) crude gained 89 cents, or 1.51%, to $59.79 a barrel after tumbling 4.24% on Friday, also the lowest since May 7. WTI will settle on Tuesday due to a U.S. holiday on Monday.
“Last week’s price meltdown was largely on the back of ceasefire in Gaza and return of U.S.-China trade volatility ahead of the 10-Nov trade truce deadline,” said Suvro Sarkar, energy analyst at DBS Bank. He added that the selloff now appears to be limited by both sides showing “willingness to negotiate,” with short-term trends depending on the outcome of the discussions.
Tensions escalated last week after China widened its rare earth export controls. In response, U.S. President Donald Trump announced plans to impose 100% tariffs on Chinese exports to the U.S. and introduce new export restrictions on “any and all critical software” by November 1.
However, Trump sought to calm markets over the weekend, posting on Truth Social: “Don’t worry about China, it will all be fine!”
The developments come ahead of a potential meeting between Trump and Chinese President Xi Jinping during the Asia-Pacific Economic Cooperation forum in South Korea later this month. Jamison Greer, the U.S. Trade Representative, said the encounter could still take place.
“The most likely scenario seems to be that both sides pull back on the most aggressive policies and that talks lead to a further – and possibly indefinite – extension of the tariff escalation pause reached in May,” analysts at Goldman Sachs wrote in a note. They also warned of the possibility of a renewed flare-up in tensions, which could temporarily result in higher tariffs or tighter export restrictions.
Oil markets have been highly sensitive to trade developments between the U.S. and China, with prices having plunged during previous bouts of tariff escalations earlier this year.
On the demand side, Chinese customs data showed that crude oil imports rose 3.9% year-on-year in September to 11.5 million barrels per day — the highest level so far this year — as refiners increased production and stockpiling continued.
In the Middle East, an official involved in the operation confirmed that Palestinian militant group Hamas released the first seven surviving Israeli hostages on Monday, marking the initial phase of a ceasefire agreement brokered with help from Trump to end the conflict in Gaza.
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