Oil prices held steady on Thursday as investors assessed a potential trade truce between the United States and China after President Donald Trump lowered tariffs on China following a meeting with Chinese leader Xi Jinping in South Korea.
Brent futures rose 8 cents or 0.1 per cent to settle at $65.00 a barrel, while the US West Texas Intermediate (WTI) crude appreciated by 9 cents or 0.1 per cent to $60.57 per barrel.
The American president agreed to reduce tariffs on China to 47 per cent from 57 per cent in a one-year deal in exchange for China resuming US soybean purchases, keeping rare earths exports flowing and cracking down on the illicit fentanyl trade.
President Trump added he also discussed the war in Ukraine launched by Russia in February 2022, saying that he and Xi agreed to “work together.”
The meeting appears to have set the stage for a broader dialogue in the coming months, with Mr Trump saying that he plans to visit China in April and that a tentative trade deal could be signed soon.
Investors see the announced agreement between the world’s two largest economies as more of a de-escalation of tension than a structural change in the relationship.
Support also came as the US Federal Reserve lowered interest rates on Wednesday by a further 25 basis points, in line with market expectations.
The Chairman of the US central bank Mr Jerome Powell’s comments after the meeting struck a note of caution on what lies ahead, signalling that it might be the last cut of the year as the ongoing government shutdown threatens data availability.
Meanwhile, the European Central Bank and the Bank of Japan kept interest rates unchanged.
The euro zone economy grew a touch more quickly than expected in the third quarter, lifted by buoyant growth in France and Spain that more than offset faltering exports and persistent struggles in Germany’s oversized industrial sector.
There are expectations that the oil market is headed for a large surplus, with the Organisation of the Petroleum Exporting Countries and allies (OPEC+) group raising output and US production at record levels. The 22-member OPEC alliance may make an additional 137,000 barrels per day output boost.