DTN Oil Update
Oil Futures Rise on US-China Trade Talk Prospects
VIENNA (DTN) -- Oil futures extended gains Wednesday morning following the announced start of China-American trade negotiations. U.S. Treasury Secretary Scott Bessent is set to meet Chinese government officials in Switzerland later this week.
NYMEX-traded WTI for June delivery was up $0.56 barrel (bbl) to trade near $59.65 bbl, and ICE Brent for July delivery rose $0.50 bbl to $62.65 bbl.
June RBOB gasoline futures declined $0.0009 to $2.0636 gallon, while the front-month ULSD futures contract gained $0.0033 to $2.0121 gallon.
The U.S. Dollar Index strengthened by 0.253 points to 99.300.
The meeting between U.S. and Chinese representatives will be the first official exchange on the topic of trade since the White House imposed trade-prohibitive tariffs on imports from China. U.S. tariff policy has over the past weeks led to a souring of demand growth outlooks at a time when the global oil market is facing the possibility of oversupply in the second half of the year.
OPEC's sizeable production hike added to oversupply concerns. Eight OPEC+ countries over the weekend agreed on a 411,000-barrels-per-day (bpd) production increase in June. The hike is part of the planned rollback of some 2.2 million bpd of voluntary adjustments implemented in addition to the group's production curtailment under the Declaration of Cooperation.
Non-OPEC production growth, meanwhile, may proceed slower than expected, particularly in a prolonged low-price environment. The U.S. Energy Information Administration's May short-term energy outlook released Tuesday contained another downward revision to U.S. crude oil production expectations. Despite this, the forecasting agency still sees global production growth outpace demand growth this year and forecasts rising global inventories.
