Picture: 123RF/PAVEL IGNATOV
Picture: 123RF/PAVEL IGNATOV

London — Oil prices rose on Monday after the US and China both suggested they could ease up in a trade war that has undermined the outlook for the global economy and for crude demand.

Brent was up 33 US cents, or 0.6%, at $59.67 a barrel by 8.50am GMT, while US oil was also up 33c, or 0.6%, at $54.50 a barrel.

US President Trump said on Monday he believed China was seeking a trade deal after Beijing contacted US officials overnight to say it wanted a return to talks.

China's top negotiator, vice-premier Liu He, had earlier said Beijing was willing to solve the impasse through “calm” negotiations and opposed an escalation.

Concerns for the global economy have increased as trade tensions between Beijing and Washington mounted in recent days.

China's Commerce Ministry said last week it would impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the US, including crude oil, agricultural products and small aircraft.

In retaliation, Trump said he was ordering US companies to look at ways to close operations in China and make products in the US.

SEB analyst Bjarne Schieldrop said the oil market was worried about “the secondary global growth effects of an upwards spiralling trade war between China and the US”.

“The second concern for the oil market is that … China is now ready to wrestle with the US in the global space of oil”.

Investors were also left guessing about whether interest rates in the US might be cut soon.

US Federal Reserve chair Jerome Powell told a symposium that the US economy was in a “favourable place” and the Federal Reserve would “act as appropriate” to keep the current economic expansion on track.

But concerns about a possible recession were exacerbated by data showing US manufacturing industries registered their first month of contraction in almost a decade.

The Brent/WTI spread was at -$5.26, after widening 60c to settle at -$5.17 on Friday. The spread blew out after China included US oil in its tariff moves.

US energy companies cut the most oil rigs in about four months last week, with the rig count falling to the lowest since January 2018, as producers cut spending on new drilling and completions.

Reuters