Oil prices increased nearly 2% on Friday, achieving their first weekly gains since mid-April, as optimism grew among investors following a U.S. trade deal with the United Kingdom. This comes ahead of upcoming discussions between officials from Washington and Beijing. Brent crude futures rose by $1.07, or 1.7%, to settle at $63.91 per barrel, while U.S. West Texas Intermediate crude futures advanced $1.11, or approximately 1.9%, to settle at $61.02. Over the week, both benchmarks saw gains exceeding 4%.
On Friday, U.S. President Donald Trump stated that China should open its market to the U.S. and suggested that an 80% tariff on Chinese goods “seems right.” This followed his announcement of a deal to reduce tariffs on British car and steel exports, among other agreements with the United Kingdom.
Alex Hodes, an oil analyst at StoneX brokerage, remarked that energy markets, despite recent bearish trends, are beginning to shed some pessimism and align with broader market optimism as progress in trade relationships becomes evident.
The agreement with the UK and Trump’s comments on China have increased expectations for similar agreements between Washington and Beijing. U.S. Treasury Secretary Scott Bessent was scheduled to meet with China’s top economic official, Vice Premier He Lifeng, in Switzerland on May 10. Current U.S. tariffs on Chinese imports are at 145%, and Hodes highlighted that while these are high, an 80% tariff represents a significant reduction.
According to customs data released on Friday, Chinese exports rose faster than expected in April, while imports saw a narrowing decline, providing some relief for Beijing ahead of the talks.
The outlook for oil prices remains uncertain, influenced by factors such as U.S. economic trends, trading policies, and sanctions on Iran and Russia, stated Marcus McGregor, head of commodities research at Conning.
On Thursday, the U.S. imposed sanctions on a third Chinese independent oil refinery for purchasing Iranian crude, preceding a fourth round of nuclear talks in Oman set for the weekend.
Although oil prices were buoyed by recent developments, they are still capped by the planned increase in oil output by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+. A Reuters survey indicated that OPEC oil output slightly decreased in April due to production declines in Libya, Venezuela, and Iraq, which overshadowed a planned increase in output. This survey added a positive element to already hopeful markets ahead of the U.S.-China trade discussions, as noted by PVM analyst John Evans.
