Oil Futures Rise on US-China Trade Talk Prospects


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil futures extended gains Wednesday morning following the 
announced start of Sino-American trade negotiations. U.S. Treasury Secretary 
Scott Bessent is set to meet Chinese government officials in Switzerland later 
this week.

   NYMEX-traded WTI for June delivery was up $0.56 bbl to trade near $59.65 
bbl, and ICE Brent for July delivery rose $0.50 bbl to $62.65 bbl.

   June RBOB gasoline futures declined $0.0009 to $2.0636 gallon, while the 
front-month ULSD futures contract gained $0.0033 to $2.0121 gallon.

   The U.S. dollar index strengthened by 0.253 points to 99.300.

   The meeting between U.S. and Chinese representatives will be the first 
official exchange on the topic of trade since the White House imposed 
trade-prohibitive tariffs on imports from China. U.S. tariff policy has over 
the past weeks led to a souring of demand growth outlooks at a time when the 
global oil market is facing the possibility of oversupply in the second half of 
the year.

   OPEC's sizeable production hike added to oversupply concerns. Eight OPEC+ 
countries over the weekend agreed on a 411,000-bpd production increase in June. 
The hike is part of the planned rollback of some 2.2 million bpd of voluntary 
adjustments implemented in addition to the group's production curtailment under 
the Declaration of Cooperation.

   Non-OPEC production growth, meanwhile, may proceed slower than expected, 
particularly in a prolonged low-price environment. The U.S. Energy Information 
Administration's May short-term energy outlook released Tuesday contained 
another downward revision to U.S. crude oil production expectations. Despite 
this, the forecasting agency still sees global production growth outpace demand 
growth this year and forecasts rising global inventories.




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