President Xi’s soothing, but essentially meaningless words on a ‘trade offer’ to the US saw stockmarkets pop (The Dow was up 428 points or 1.8%), while European stocks also rose nicely. Gold edged up to $US1,343 an ounce, but oil jumped more than 3% to the highest level since December 2014 for the key Brent global indicator.
Brent crude’s three year plus high came as geopolitical concerns in the Middle East — coupled with easing US-China trade tension, a weaker dollar and a small decline in forecasts for US oil production — saw the oil bulls emerge after being battered on Friday.
The global oil marker rose as much as 3.9% to $71.34 a barrel, blowing past its recent January peaks to reach a level last seen in December 2014.
Brent ended up $US2.39, or 3.5% to settle at $US71.04 in Europe. That was the highest finish for the most active contract since December 1, 2014, according to FactSet.
In New York, May West Texas Intermediate crude rose on $US2.09, or 3.3%, to settle at $US65.51 a barrel. The settlement was the highest since March 26, according to FactSet.
Crude prices at the end of last week closed down roughly 2%, capping their worst week in two months, as the US threatened new tariffs on Chinese imports and Beijing responded in kind.
Oil had already started off Tuesday with big gains as the US closed in on a decision on whether to launch a strike on Syria in response to an alleged gas attack. The jump in oil prices underscores fears that the escalating conflict in Syria could pit the US against Russia and Iran — two of the world’s major oil producers.
The oil market got another boost later on in the day after data from the US government said domestic production would be slightly lower in 2018 than previously – but not by much. The US Energy Information Administrations still expects production to total 10.7 million barrels a day this year – a record. Production was 9.3 million barrels a day in 2017.
Concerns about a trade war between the US and China also eased some more after President Donald Trump struck a more conciliatory tone, saying on Twitter on Tuesday that he will “make great progress together” with China’s president, Xi Jinping.
