Oil prices surged by 3% as optimism grew over global trade developments and U.S. crude inventories declined, offering support to a market struggling with long-term bearish sentiment.
West Texas Intermediate (WTI) crude futures rose 3.2%, nearing $60 a barrel. President Donald Trump’s announcement of a new trade framework with the United Kingdom sparked hope for reduced barriers to U.S. exports in agriculture, chemicals, energy, and industry. While the agreement maintains a baseline 10% tariff and covers a limited scope, investors welcomed the signal of progress.
The announcement renewed market confidence ahead of upcoming U.S.–China trade talks. Trump hinted that if negotiations advance, tariffs on Chinese imports — currently as high as 145% — could be reduced. The world’s largest oil importer, China, plays a key role in oil demand, making these negotiations critical for the energy sector.
Rebecca Babin, senior energy trader at CIBC Private Wealth Group, noted that “risk assets are being driven by rekindled optimism over U.S.–China trade progress,” although she also acknowledged that overall market sentiment toward oil remains largely bearish.
Since Trump took office, oil prices have struggled under pressure from trade disputes, which raised fears of a global economic slowdown and reduced energy demand. Additionally, OPEC+’s decision to ramp up idle capacity faster than expected added to negative market sentiment. These factors have pushed U.S. shale producers to reduce spending in the Permian Basin.
Still, the options market shows signs of bullish bets. There has been heightened activity in Brent $95 call options, which profit when futures rise.
In a geopolitical twist, the U.S. imposed new sanctions on a third Chinese “teapot” refinery and several Iran-linked entities on Thursday. This comes days before Washington and Tehran are scheduled for a fourth round of nuclear talks. Citigroup analyst Eric Lee warned that failure in these negotiations could push Brent crude toward $70 per barrel.
Further supporting prices, the U.S. Energy Information Administration (EIA) reported a second consecutive week of crude inventory draws, bringing stocks to their lowest since late March. Inventories at the Cushing, Oklahoma hub also declined.
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