Oil prices hold steady on hopes trade tensions could ease
Brent crude LCOc1 edged higher by 1 cent to $59.75 a barrel by 0344 GMT, after rising 1.88% on Monday.
U.S. crude CLc1 had slipped by 6 cents to $56.15 a barrel, after gaining 2.44% in the previous session.
The United States said it would extend a reprieve that permits China’s Huawei Technologies to buy components from U.S. companies, signaling a slight softening of the trade conflict between the world’s two largest economies.
The extension sets a very “comforting tone” ahead of next month’s U.S.-China trade talks, Stephen Innes, managing partner of VM Markets, said in a note.
“The U.S.-China trade spat has been at the center of the oil market demise, which has sent the global economy to the brink of recession and negatively impacted oil demand forecasts,” he said.
China’s new lending reference rate was set slightly lower on Tuesday after the central bank announced interest rate reforms designed to reduce corporate borrowing costs, while Germany’s right-left coalition government said it would be prepared to ditch its balanced budget rule and take on new debt to counter a possible recession.
Meanwhile, a Reuters poll of seven analysts revealed expectations that crude oil inventories in the United States fell by 1.9 million barrels in the week to Aug. 16.
The poll was conducted ahead of reports from the American Petroleum Institute (API), an industry group, and the Energy Information Administration (EIA), an agency of the U.S. Department of Energy.
“An unexpected rise, (could) possibly (take) the wind out of oil’s sails, if only temporarily,” said Jeffrey Halley, a senior market analyst at OANDA.
The API is scheduled to release its data on Tuesday.
Still, prices were weighed down by a report from the Organisation of the Petroleum Exporting Countries (OPEC) that stoked concerns about oil demand growth.
Traders were also watching for signs of tension in the Middle East after the United States called the release of an Iranian tanker at the center of a confrontation between Iran and Washington unfortunate, warning Greece and Mediterranean ports against helping the vessel.