Oil Rises on Production Cuts, Renewed Trade Talks
Oil prices were higher during Monday’s Asian trading session after trade talks started up again between Washington and Beijing and traders felt renewed optimism that a deal would be formed. The talks will be taking place in Beijing on Monday and Tuesday and will have participants from the Office of the U.S. Trade Representative, the Treasury Department, and the Agriculture, Energy, and Commerce Departments.
U.S. WTI futures were trading at $48.89 per barrel as of 3:04 p.m. HK/SIN, up 1.94 percent, while Brent crude futures were up 1.68 percent to $58.02 per barrel. Also supporting prices were supply cuts implemented by OPEC and its oil-producing partners after the start of the new year, whose goal was to reduce the global supply gut and keep prices high, especially in the face of a global economic slowdown.
The next deadline in the trade war will be in March, after which point, U.S. President Donald Trump has threatened additional tariffs on Chinese goods if a deal is not struck. Trump has specific demands for the current talks, many of which focus on his discontent with Chinese forced technology transfers, ownership of American companies in China, and alleged Chinese theft of intellectual property. Trump is especially keen to convince China to agree to his terms as Chinese trade problems have long been one of his primary issues. As Trump struggles with record low approval ratings, a three-week government shutdown, and a lack of progress with the Mexican border wall, another one of his key campaign issues, a victory related to Chinese trade has become even more crucial.
Asian stocks headed broadly higher on Monday in light of the renewed optimism, with Japan’s Nikkei 225 enjoying the largest gains, up 2.44 percent in the mid-afternoon. The Shenzhen Composite saw a 1.68 percent increase, while South Korea’s Kospi was up 1.34 percent. The Shanghai Composite gained 0.72 percent.