Crude oil prices experienced a lift of around 1% on Wednesday, fueled by renewed hopes of potential trade negotiations between the United States and China, along with reports indicating that Iraq is planning to reduce its oil production in the coming month.
Brent crude futures saw a rise of 70 cents, amounting to 1.08%, settling at $65.37 per barrel by 1311 GMT, while U.S. West Texas Intermediate crude also climbed by 70 cents, or 1.14%, to $62.03.
The market received a boost after a report from Bloomberg, citing an anonymous source, outlined China's stance of desiring increased respect from the Trump administration as a prerequisite for engagement in talks. The source noted that China seeks the appointment of a new primary contact for future discussions, a development that has been closely monitored by analysts.
UBS analyst Giovanni Staunovo highlighted the potential positive impact of a reduction in trade tensions between the U.S. and China on economic growth prospects, which could consequently uphold oil demand growth.
Moreover, bullish sentiment prevailed in the oil market following reports that Iraq intends to curtail its oil output by 70,000 barrels per day in April to meet its OPEC+ commitments, as reported by Bloomberg.
Despite these positive developments, concerns loomed over the global oil demand, following the International Energy Agency's projection on Tuesday of the slowest oil demand growth in five years by 2025.
Trade uncertainties were exacerbated by the World Trade Organization's revised forecast for global merchandise trade, warning that U.S. tariffs might lead to a severe downturn reminiscent of the COVID pandemic peak.
The ongoing trade tensions have exerted downward pressure on oil prices this month, with a decline of about 13%. Additionally, various financial institutions, including UBS, BNP Paribas, and HSBC, have revised their crude oil price estimates amid the escalating trade conflicts.
The intensifying trade war between the two largest economies, fueled by tariff escalations, underscored the markets' cautious stance. Yet, data revealed on Wednesday showcased China's first-quarter GDP growth at 5.4%, outperforming expectations.
PVM Oil analyst Tamas Varga highlighted that the robust performance was attributed to exporters accelerating shipments to evade impending U.S. excise duties, emphasizing the uncertainties surrounding the global economic landscape.