Crude oil logs first weekly gain since mid-April on US-China trade talks; Brent sits at $63, WTI gains 4% in five days

International crude oil prices settled two per cent higher in the previous session and notched their first weekly gains since mid-April after the US trade deal with the United Kingdom turned commodity market investors optimistic ahead of talks between top officials from Washington and Beijing.

Brent crude futures rose $1.07, or 1.7 per cent, to settle at $63.91 a barrel, while US West Texas Intermediate crude futures advanced $1.11, or about 1.9 per cent, to settle at $61.02. Week-over-week, both benchmarks gained over four per cent. Back home, crude oil futures last settled 0.85 per cent higher at ₹5,207 per barrel on the multi commodity exchange (MCX).

What's driving crude oil prices?

-US President Donald Trump on Friday said China should open its market to the US, and that an 80 per cent tariff on Chinese goods "seems right," a day after he announced a deal lowering tariffs on British car and steel exports, among other agreements with the United Kingdom.

-The UK agreement and Trump's comments on China have raised hopes for similar deals between Washington and Beijing. US Treasury Secretary Scott Bessent was to meet with China's top economic official, Vice Premier He Lifeng, in Switzerland. Current US tariffs on Chinese imports stand at 145 per cent.

Customs data showed on Friday that Chinese exports rose faster than expected in April while imports narrowed their decline, giving Beijing some relief ahead of the talks. Rising hostilities in the Middle East also boosted oil prices this week.

-Israel's military said it had intercepted a missile launched from Yemen towards its territory, days after Oman mediated a ceasefire between the US and Yemen's Houthis, who claimed responsibility for Friday's attack. The US imposed sanctions on a third Chinese oil refinery for purchasing Iranian crude, ahead of a fourth round of nuclear talks in Oman this weekend.

-The planned increase in oil output by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) kept gains at bay. However, a Reuters survey found that OPEC output edged lower in April after production declines in Libya, Venezuela, and Iraq outweighed a scheduled increase in output.
 

Crude oil price outlook

The outlook for oil prices remains uncertain and will largely depend on the trajectory of the US economy, its trading policies and the enforcement of sanctions on Iran and Russia. Analysts noted a larger-than-expected drop in US crude inventories and signs of potential supply correction provided support.

"However, concerns remain over rising US economic uncertainty, OPEC+ plans to increase production, and the impact of a potential US-Iran nuclear deal on global oil supply, capping further gains," according to Mehta Equities.

"We expect crude oil prices to remain volatile, with support seen at $59.00-58.30 and resistance at $60.45-61.10. In INR terms, crude oil has support at ₹5,070-4,980 while resistance is at ₹5,240-5,320," said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.