Brent gains as US and China set to begin second round of talks

The front-month ICE Brent contract has gained by $1.45/bbl on the day from Friday, to trade at $66.55/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

Oil prices have gained momentum as the global oil market's focus has now shifted to US-China trade talks set to commence in London later today.

Last week, a phone call held between US President Donald Trump and Chinese counterpart Xi Jinping led to a “very positive conclusion,” according to media reports. The news has boosted oil demand growth sentiment in the two top oil consumers.

“The US President and the Chinese President agreed to continue trade discussions in order to address issues related to tariffs and rare earth minerals,” Price Futures Group’s senior market analyst Phil Flynn remarked. “It will more than likely would lead to a resumption of oil imports into China from the United States,” he added.

On the supply side, Canadian wildfires in recent weeks have caused operational hurdles for oil production, pushing Brent’s price higher. Canadian wildfires typically occur between May and September.

Downward pressure:

US drilling activity has continued to decline amid the broader weakness in oil prices.

The total number of rigs drilling for crude oil in the US declined by nine to 442 units last week, according to Baker Hughes.

Lower drilling activity can indicate a slowdown in oil demand, market analysts said. This week’s data marked the sixth consecutive week of decline, two analysts from ING Bank noted.

“In the US market, drilling activity continues to slow,” the analysts said, marking the “longest period of declines since mid-2023.”

By Aparupa Mazumder

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