The oil price received a surprise boost in yesterday’s trading session climbing around 4 percent after the decision by US President Donald Trump to delay introducing more tariffs on Chinese goods held out hope that a compromise in the ongoing trade wars was still a possibility.
After the news that the U.S had decided to postpone tariffs on some Chinese goods, China announced that the two sides will hold new talks in two weeks to try and get the trade deal back o track which sent the oil price surging.
“Some of the pessimism about oil demand and the trade war is being washed out of the market by these announcements,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.
The breakdown in trade talks has brought nothing but pain for the oil price as analysts believe that the issue will hit overall global growth so any return to the negotiating table was always going to boost the price.
“The possibility that the United States and China can get the trade talks on track ... is raising hopes that they might actually get some type of deal,” said Phil Flynn, analyst at Price Futures Group in Chicago.
“That’s why we are seeing this big rebound in prices,” Flynn added.
Tuesday marked the fourth straight day of gains for oil,helped along by Saudi Arabia’s discussion other OPEC producers about what additional steps the group could take to stop the slide in the oil price which is starting to take its toll on the Saudi Arabian economy as the country relies so much on the current price.
There is also the much anticipated public listing of its crown jewel, Saudi Aramco. Aramco’s valuation, which The Kingdom believes is $2 trillion, in reality is decided by the market and based on the current oil prices.
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