A barrel of West Texas Intermediate crude oil for December deliveries cost $61.91 on the New York NYMEX in the morning Polish time, which meant an increase of almost 0.7 percent. Brent crude oil on the ICE exchange in December deliveries gained to a similar extent and was valued at USD 66.39. per barrel. Later, the direction of the indices movement changed and closer to At 9.30 the prices of black raw materials were falling by approximately 0.6 percent.
Progress on the U.S.-China trade agreement leads to a possible improvement in the demand outlook for oil and its productsand this weakens concerns about a surplus of raw materials on global markets.
The preparatory talks between the US and Chinese delegations that ended on Sunday in Malaysia created a “very good framework” for concluding a trade agreement during the meeting between President Donald Trump and Chinese leader Xi Jinping, said US Treasury Secretary Scott Bessent. He described the two-day negotiations in Kuala Lumpur as “constructive and far-reaching.”
“I think we have a very successful framework that leaders will be able to discuss on Thursday,” said the US Treasury Secretary, referring to Trump's meeting with Xi in South Korea scheduled for October 30 on the sidelines of the Asia-Pacific Economic Community (APEC) summit. “We discussed trade, rare earth metals, fentanyl, TikTok and general relations between the two countries,” concluded the Washington representative.
Recent weeks have brought new, significant tensions in the relations between the world's two largest economies, including Chinese restrictions on the export of rare earth metals. Trump then threatened to introduce 100 percent tariffs on Chinese goods from November 1.
The temporary “truce” concluded during previous rounds of negotiations, under which the tariff rate on goods from China dropped to 30 percent and Chinese tariffs on goods from the US – to 10 percent, is valid until mid-November.
Bessent suggested an extension is likely. – Coming out of this meeting, I would say yes, but ultimately it is President Trump's decision – he noted. He also emphasized the good atmosphere of talks with the Chinese delegation led by Deputy Prime Minister He Lifeng.
— The hope for the imminent conclusion of a trade agreement between the US and China has a positive impact on market sentiment and the prospects for oil demand, said Vandana Hari, founder of the consulting company Vanda Insights. “This adds to the risk premium associated with crude oil supplies from Russia,” she added.
— However, I expect that the oversupply of oil on global markets may limit the increase in raw material prices, and Brent crude oil may return to its “comfort zone”, i.e. around USD 60. per barrel, she emphasized.
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Meanwhile, Chinese state oil companies have suspended purchases of Russian oil transported by sea in response to new sanctions imposed last week by the US on Russian companies Rosneft and Lukoil. State oil giants in China, such as PetroChina, Sinopec, CNOOC and Zhenhua Oil, have suspended purchases of Russian raw material “at least in the short term” for fear of sanctions.
President Trump on an Asian trip
Donald Trump touched down in Malaysia on Sunday, beginning his first tour of the region in his second term. He oversaw the signing of the peace declaration between Thailand and Cambodia. The US president signed an agreement with Malaysian Prime Minister Anwar Ibrahim on trade and key minerals, as Washington sought to increase trade in the region and responded to China's tightening access to rare earth elements.
The US president is later scheduled to hold bilateral meetings in Japan and South Korea, where he is also expected to meet Chinese President Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation summit. Trump, speaking to reporters aboard Air Force One, said he hoped talks with Xi would result in a “full agreement.”
This meeting will be the first direct meeting of the leaders of the two largest economies this year. Trump has said face-to-face talks are the best way to resolve issues such as tariffs, export restrictions, agricultural purchases, the fentanyl trade, geopolitical hotspots such as Taiwan and the war in Ukraine. – We will talk about many things. “I think we have a really good chance of concluding a very comprehensive agreement,” he said.
