SINGAPORE, Oct 13 (Reuters) – Oil prices rose on Monday after hitting a five-month low in the previous session, with investors hoping that possible negotiations between the U.S. and Chinese presidents could ease trade tensions between the world’s two largest economies and oil consumers.
Brent crude futures rose 92 cents, or 1.47 percent, to $63.65 a barrel at 0408 GMT after settling on Friday at 3.82 percent, the lowest since May 7.
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U.S. West Texas Intermediate crude was at $59.79 a barrel, up 89 cents, or 1.51 percent, after losing 4.24 percent to its lowest level since May 7. WTI prices will stabilize on Tuesday as Monday is a holiday in the United States.
“The rebound in oil markets was likely caused by profit-taking as traders bet on the so-called ‘TACO’ trade after Trump and Vice President JD Vance signaled that the newly announced tariffs were more of a negotiating tool and that they were open to striking a deal with China,” said independent analyst Tina Teng, referring to a trade rule that says “Trump always chickens out.”
“However, (price) volatilities are expected. I don’t expect oil or any other risk assets to reverse losses so soon,” she added.
“The most likely scenario appears to be that both sides back away from the most aggressive policies and that negotiations lead to a further — and perhaps indefinite — extension of the tariff escalation pause agreed in May,” Goldman Sachs analysts said in a note.
However, there is still a risk of escalating trade tensions that could lead to higher tariffs or tougher export restrictions, at least temporarily, they added.
Oil prices fell in March and April, at the height of trade tensions between the two countries.
Reporting by Florence Tan; Editing by Lincoln Feast and Sonali Paul
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