Brent gains following US-China trade deal

The front-month ICE Brent contract has gained by $0.82/bbl on the day, to trade at $68.37/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

Oil has rebounded from earlier losses amid signs of strengthening demand in the US.

Commercial US crude oil inventories have plunged by about 5.8 million bbls to touch 415 million bbls for the week ending 20 June, according to data from the US Energy Information Administration (EIA).

“The Energy Information Administration reported stunning numbers,” Price Futures Group’s senior market analyst Phil Flynn remarked.

A draw in US crude stockpiles signals stronger demand and can provide some support to Brent's price.

Brent has gained additional support following news that Washington and Beijing have reached an agreement to expedite rare earth shipments to the US, Reuters reports. The news is “constructive for the [oil] market, particularly ahead of the reciprocal tariff deadline of 9 July,” ING Bank analysts said.

Downward pressure:

Brent’s price has come under pressure as the ceasefire agreement between Iran and Israel appears to hold, according to market analysts.

Besides, delegates from the US and Iran are set to resume talks next week in a renewed effort to reach an agreement on Tehran’s nuclear enrichment program.

“The oil market’s attention is shifting back to tariffs and other risks,” analysts from ING Bank noted.

Another key focus is OPEC+’s upcoming meeting on 6 July to decide August production levels. Market analysts expect the Saudi Arabia-led group to continue unwinding supply cuts by another 411,000 b/d in August – the same as July.

“These supply hikes should ensure that the oil market moves into a large surplus towards the end of the year,” ING Bank analysts added.

By Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online