Formal negotiations between China and the U.S., which were set to get under way on Tuesday in Shanghai, also were being watched for signs of progress, which could help support global economic expansion. Tensions between the superpowers have underpinned concerns about crude appetite.
U.S. President Donald Trump has suggested that Beijing may avoid inking a tariff agreement with the U.S. until it determines the outcome of the 2020 presidential election. “I think that China will probably say, ‘let’s wait,’” he told reporters in the Oval Office. “When I win, like almost immediately, they’re all going to sign deals.”
U.S. trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will lead the Sino-American tariff talks.
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Oil futures traded mixed early Monday as crude investors weighed the health of the global economy and its impact on energy uptake.
The planned resumption of trade talks between the U.S. and China, the world’s largest economies, also was in focus but commodity investors appeared doubtful that a near-term resolution could be achieved, which would if achieved help support energy demand and higher crude prices.
West Texas Intermediate crude for September delivery CLU19, +0.12% on the New York Mercantile Exchange added 4 cents, or about 0.1%, at $56.22 a barrel, while October Brent crude BRNV19, -0.19%, the global benchmark, gave up 13 cents, or 0.2%, to $63.24 a barrel on the ICE (NYSE:ICE) Europe exchange.
Last week, U.S. benchmark WTI posted a 1.5% rise for the week, while Brent, notched a 1.5% weekly advance.
Oil has mostly been drifting higher amid geopolitical tensions between Iran and other countries, notably the U.S. and Britain in the Strait of Hormuz, a key chokepoint for oil in the Middle East to the rest of the world. Washington’s decision last May to pull out of a 2015 Iran nuclear deal set the stage for increased animosities in the region.
On Monday, the U.K. sent a warship to escort its vessels in the region and warned Tehran that it must release a British-flagged vessel seized this month.
Meanwhile, the Federal Reserve’s policy decision, where it is expected to cut benchmark interest rates by a quarter-of-a-percentage point, also could be a key inflection point for global markets, as central bank’s attempt to curtail a global slowdown that could impinge upon energy consumption.
Global economic growth prospects remain fragile, so energy traders will closely await updates on both the trade front and Fed policy.