By Seher Dareen
LONDON (Reuters) – Oil prices recovered from early losses on Monday, as optimism over a U.S.-China trade deal offset concerns about weak demand for crude.
Brent crude futures were down 14 cents, or almost 0.2%, at $65.70 a barrel by 1227 GMT. US West Texas Intermediate crude oil futures fell 9 cents, or 0.2%, to $61.41. Both contracts fell about 1% in early trading.
U.S. Treasury Secretary Scott Bessent said on Sunday that U.S. and Chinese officials had put together a “substantial framework” for a trade deal that could avoid 100% U.S. tariffs on Chinese goods and achieve a deferral of China’s rare earth export controls in trade discussions this week.
This boosted global stocks on Monday, while gold and bonds, considered safe havens, retreated, along with oil. (MKTS/GLOB)
DEMAND CONCERNS WEIGHT ON OIL
“Oil market participants are much more skeptical of trade deals than their stock counterparts. A bright trading atmosphere doesn’t immediately mean demand,” said PVM Oil Associates analyst John Evans.
Concerns about lackluster demand have weighed on the market, with Brent falling to its lowest level since May earlier this month, but renewed US sanctions on Russia along with stronger-than-expected US demand have helped boost prices.
“The hope for the bulls is that US consumption continues to recover, otherwise it looks like the decline seen so far will likely intensify,” said Chris Beauchamp, chief market analyst at IG Bank.
Meanwhile, Iraq, the OPEC group’s biggest superproducer, was in negotiations over the size of its quota within its available capacity of 5.5 million barrels per day, Oil Minister Hayan Abdel-Ghani said at an oil conference on Monday.
OPEC and its allies have changed course this year by reversing earlier production cuts to regain market share, helping in part to keep oil prices in check.
Sunday’s fire at Iraq’s Zubair oil field did not affect the country’s exports, the country’s oil minister added.
Last week, Brent and WTI rose 8.9% and 7.7%, respectively, due to US and EU sanctions on Russia.
“Challenges to Russian oil entering the market are likely to continue, but it depends on how sanctions will be applied,” said Rystad analyst Janiv Shah.
(Reporting by Seher Dareen in London, Sam Li and Colleen Howe. Editing by Chizu Nomiyama and Mark Potter)