CRANBURY, N.J. (DTN) -- Oil futures traded on the New York Mercantile Exchange (NYMEX) and Brent crude on the Intercontinental Exchange rallied early Tuesday, continuing Monday's sharp advance as worry over a trade war between the United States and China eased following a speech by China's president, sparking a rally in equities and oil futures.
In a keynote address to the Boao Forum for Asia, Chinese President Xi Jinping spoke of a new phase of openness in trade, pledging to open industry sectors while speaking of win-win scenarios. While vague in specifics, Xi diffused tough talk from Chinese officials that pledged to retaliate harshly if U.S. President Donald Trump moved ahead with his plan to impose tariffs on $100 billion of Chinese imports to the United States in addition to $50 billion already announced along with tariffs on imported steel and aluminum that are in effect.
Xi's speech follows comments by Trump on Monday that the two leaders were friends, and his expectation that they would negotiate a resolution to their differences. Over the weekend, White House officials looked to dial back worry over a trade war between the world's two largest economies after China announced tariffs on more than 200 U.S. products imported by China.
Equities rallied on Xi's speech, with the Dow spiking more than 350 points at the open, with the S&P 500 Index up nearly 35 points and the Nasdaq surging nearly 100 points. The U.S. dollar weakened to a better-than one-week low.
At 9 a.m. ET, May West Texas Intermediate futures were up $1.00 near $64.41 barrel (bbl), and traded at a $64.83 bbl one-week high, with ICE June Brent gaining $1.10 to $69.75 bbl, and traded at a better than one-week high of $70.21 bbl.
NYMEX May RBOB futures were 2.4 cents higher near $2.0080 gallon, and have since traded at a $2.0221 one-week high, with May ULSD futures up 2.57 cents near $2.0225 gallon after posting a one-week high at $2.0312 gallon.
The two-day rally in oil futures have erased losses for the second quarter.
Also underpinning oil futures is Saturday's chemical weapons attack in Syria on a rebel position that killed nearly 50 people, including women and children, according to reports. Syria denied its role in the bombing, and Russia, an ally along with Iran in the years-long civil war, called the event a "hoax."
On Monday, Trump promised a "big price to pay," for the attack, saying a decision on how to respond would be made within the next 48 hours.
"[W]e're making decisions as to what we do with respect to the horrible attack that was made near Damascus. And it will be met. And it will be met forcefully," said Trump late Monday night, according to BuzzFeed News.
At midday, the Energy Information Administration (EIA) will release its Short-term Energy Outlook, which will provide a forecast for oil supply and demand through 2019.
Brian L. Milne can be reached at firstname.lastname@example.org
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