DTN Oil Update
Oil Rises on Trade Deal Progress, Inventory Draws
VIENNA (DTN) -- Oil futures rose Friday morning after Chinese and U.S. American government officials confirmed progress in trade negotiations. A trade deal was signed this week, formalizing the agreement reached in London last month, according to Commerce Secretary Lutnick. The Chinese Commerce Ministry on Friday confirmed his comments.
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NYMEX-traded WTI for August rose $0.46 barrel (bbl) to trade near $65.70 bbl, and ICE Brent for August delivery gained $0.44 bbl to $68.17 bbl.
July RBOB gasoline futures slid $0.0085 to $2.0905 gallon, while the front-month ULSD futures contract advanced $0.0024 to trade near $2.3625 gallon.
The U.S. Dollar Index strengthened by 0.108 points to 96.870.
The deal would loosen ethane export restrictions from the United States to China in return for rare earth flows. While most details remain unknown, the agreement will likely keep tariffs at or near current levels, codifying the 90-day tariff freeze.
Oil prices were also supported by a weekly U.S. government inventory report showing oil and product stocks declining, with commercial crude oil inventories falling for a fifth straight week to an 11-year seasonal low. Diesel inventories tightening to 20% below the five-year average further lent support.
Oil futures have fallen back to pre-war levels after a turbulent week. As the geopolitical risk-premium has almost entirely evaporated, market participants will likely return their focus to market fundamentals, with the direction of U.S. trade policy, global demand growth and the speed of OPEC output hikes remaining the largest sources of uncertainty.