Oil Prices Steady, Trade Deal in Focus
Oil prices held steady after early losses on Monday. As concerns over the conflict between the US and Iran potentially breaking into a war receded. Although the energy commodities complex expects to gain some support on the upcoming trade deal.
US crude oil West Texas Intermediate (WTI) futures gained 0.07% to $59.08 a barrel. This followed the 6.4% fall last week, to post its largest weekly loss in over six months due to cooling US-Iran tensions.
International benchmark Brent crude oil futures rose 0.08% to $65.03 a barrel.
Moreover, trading in precious metals was in the red, with the safe-haven gold dropping 0.5% to $1,551.35 per ounce.
Trade Deal to Support Oil Prices
Oil prices have retreated from record highs hit in the past week as the worst-case scenario of the dispute between the two nations became less likely.
Without Iran-related energy disruption, additional non-OPEC supply will comfortably exceed demand. This is placing downward pressure on prices, according to Asia-Pacific market strategist Stephen Innes.
Innes, however, said hopes of a US inventories draw may support energy commodities this week.
Iran-related Disruption Eased
The US House of Representatives passed a resolution on Thursday. It capped US President Donald Trump’s authority to carry out further military action against Iran.
US Vice President Mike Pence also said the Middle Eastern country has asked its allied militias not to strike American targets or civilians.
Still, the situation in Iran remains volatile. Especially after its government admitted it had accidentally shot down a Ukrainian passenger jet. There 176 people died on board.
The country’s officials initially denied that it had shot down the aircraft.
The jetliner crashed early Wednesday. Hours after Iran fired over a dozen ballistic missiles on two Iraqi military compounds housing US forces in response to the killing of Iranian General Qassem Soleimani.
Iran’s government stated on Sunday that it was assembling a team to investigate the crash and compensate victims.
With the threat of a war between the two countries fading, the signing of the US-China trade agreement this week is expected to drive oil prices up on higher demand outlook.
Sentiment for energy commodities appears to have turned a corner on the trade-war front. While some green shoots regarding the industrial activity and the start of fiscal stimulus could mean demand surprised to the upside, according to oil analyst Virendra Chauhan.
The US-China trade deal signing is in Washington on Wednesday.
Under the terms of the agreement, China will raise imports from the US. This is in exchange for the suspension of the import tariffs employed in December. And the reduction of some existing duties.
Trump has also said talks for the Phase 2 trade agreement will begin soon after the signing of the Phase 1 deal.
