Oil prices have eased as a result of minimal details provided on the first phase of a trade deal between the US and China.
Brent crude futures fell by $0.25 to $60.26 a barrel, while US West Texas Intermediate (WTI) crude futures were down by $0.25 at $54.45 a barrel, reported Reuters. The scant details on the trade agreement undercut last week’s optimism over the thaw that helped to lift crude markets by 2%.
CMC Markets chief strategist Michael McCarthy was quoted by Reuters as saying: “There is an argument that the oil market trading during US hours on Friday have already had a chance to price (in) the news on the trade dispute and the better outlook for global demand.
“So traders are reluctant to push it further given those very strong gains.”
The oil price gains on 11 October came after an Iranian oil tanker was attacked off Saudi Arabia’s coast in the Red Sea. National Iranian Tanker Company (NITC) confirmed that investigations are currently underway to determine if the tanker was hit by missiles. This is expected to ignite more tensions between Tehran and Riyadh upon confirmation.
The immediate need for a phase one trade deal between the US and China as well as Washington’s move to suspend threatened tariffs on Chinese products also helped to lift financial markets worldwide.
AxiTrader Asia Pacific market strategist Stephen Innes mentioned in a note: “Traders view the deal in a tentative light … This baby-step agreement could take weeks to iron out.”