DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil futures rallied to a two-month high Wednesday morning after U.S. President Trump announced a trade deal between the United States and China. While details remained sparse, the agreement reached after two days of negotiations in London signaled a significant de-escalation in current trade tensions.

NYMEX-traded WTI for July delivery was up $1.53 bbl to trade near $66.51 bbl, and ICE Brent for August delivery rose $1.31 bbl to $68.18 bbl.

July RBOB gasoline futures jumped $0.0342 to $2.1222 gallon, and the front-month ULSD futures contract gained $0.0214 to trade near $2.1630 gallon.

The U.S. Dollar Index softened by 0.345 points to 98.725.

The trade deal will likely freeze tariffs at current lower rates, formalizing the 90-day pause implemented last month, and include provisions on rare earth shipments from China to the United States.

Oil prices also experienced tailwinds on the geopolitical front. The President uttered fresh skepticism overreaching an agreement with Iran in ongoing nuclear talks, easing oversupply concerns which were fueled by slowed demand growth and OPEC ramping up production. At the same time, the EU Commission proposed fresh sanctions on Russia, including lowering the oil price cap to $45 bbl and banning additional so-called "shadow vessels" which participate in illicit oil trade.