WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange reversed higher in early trade Monday after slumping to new lows overnight, as Saudi Arabia pledged to balance the oil market by limiting supply amid deepening global trade disputes that could slow demand.
NYMEX July West Texas Intermediate futures were up $0.75 at $54.25 barrel (bbl) shortly after 9 a.m. ET after slumping to a four-month low on the spot continuous chart at $52.11 overnight. ICE August Brent crude reversed off a $60.55 four-month spot low to trade up $0.40 near $62.40 bbl. NYMEX July ULSD futures were up 0.4 cents near $1.8445 gallon after falling to a $1.8075 gallon five-month spot low. NYMEX July RBOB futures moved off a $1.7371 three-month low on the spot chart to trade flat near $1.7715 gallon.
Oil futures turned higher on Monday after both China and Mexico signaled their willingness to negotiate with Washington after a sharp escalation in tariff threats last week. According to the wire services, Mexico's president is sending a delegation to the United States this week to discuss granting asylum for Central American refugees in Mexico, indicating concessions in the protracted immigration crisis. Meanwhile, China indicated this weekend it was willing to return to negotiations with the United States, but only after releasing an official government document blaming Washington for the breakdown of the trade talks.
Markets remained on edge last week, as aggressive U.S. trade policy spurred investor concerns of impeding recession and disruption in global trade flows. Oil futures notched a nearly 20% decline in May, while U.S. equities registered the longest losing streak since June 2011.
Wall Street Journal reported Trump's tariffs on Mexico could hit as much as $360 billion in traded goods and would represent the biggest imposition to date of such duties on a U.S. trading partner. According to Oxford Economics, U.S. economic growth is expected to decline 0.7% in 2020 if progressive U.S. tariffs on Mexico are carried out to completion in October.
Saudi energy minister attempted to calm the markets on Sunday by pledging "to do what is needed" to sustain oil market stability against the backdrop of rising global trade tensions. Al Khalid pointed to effectiveness of OPEC cuts and said the group is flexible to adjust the policy for the "shared objective" of avoiding oil market surpluses. The comments follow the previous statement from Saudi Arabia King Salman warning that Iran's aggression represents a "grave danger" to security of maritime traffic.
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