Oil hit $70 a barrel on Tuesday, in its biggest two-day rally in nearly a month, as investors grew more confident that a brewing trade dispute between the United States and China may be resolved without causing harm to the global economy.
Brent crude futures were last up $1.35 at $70.00 a barrel by 1418 GMT, while West Texas Intermediate crude futures rose $1.30 to $64.72 a barrel.
President Xi Jinping on Tuesday promised to open China’s economy further and lower import tariffs, striking a conciliatory tone on the trade tensions between China and the United States.
Equities and industrial commodities rose, while perceived safe-havens such as gold and U.S. Treasuries came under pressure, reflecting confidence among traders and investors that a trade war is increasingly unlikely.
The oil price has risen by 4.5 percent in the last two trading days to reach its highest since March 29 and is only 1.2 percent below the 2018 peak at $71.05 from late January.
“It’s not so much ‘risk on/risk off’, as it is ‘trade war on/trade war off’ and, at the moment, we’re ‘trade-war off’,” London Capital Group’s Jasper Lawler said.
“There’s a lot of political motivation in the tariffs in the United States, but ultimately, they won’t want a trade war, there is a general desire to boost the U.S. economy.”
Concerns of a prolonged trade dispute between the world’s two biggest economies and uncertainty over the supply and demand balance of global oil markets have made for volatile trading in the last few weeks. (