Oil continued its recovery as attention moved from the deescalation of the US-China trade war towards the Middle East.
Brent rose above $65 a barrel, after gaining more than 6% in the previous three sessions. President Donald Trump, who signaled progress in nuclear talks with Iran, started his trip to the Middle East on Tuesday with a stop in Saudi Arabia, OPEC+'s de-facto leader.
The kingdom has pushed for the cartel to increase production to punish non-compliant members, contributing to a recent drop in prices. The 90-day truce on tariffs between the US and China, the top two crude consumers, has offered some reprieve.
"The macroeconomic outlook improved swiftly," said Ole Hvalbye, a commodities analyst at SEB. "Attention is shifting from U.S.-China trade deescalation back toward market fundamentals and geopolitical developments in the Middle East."
Oil has lost more than 10% since Trump first announced sweeping tariffs at the start of April, threatening global economic growth and fuel demand. Meanwhile, the Organization of the Petroleum Exporting Countries and its allies are seen further boosting output at a June 1 meeting, adding to concerns a glut will form later this year.
In the short-term, market gauges are giving mixed signals. Nearby gasoline spreads are the strongest in months, as Americans opt for more road trips instead of flying. At the same time, however, a key North Sea trading window has been inundated with offers for crude — a bearish signal.
Source: Bloomberg
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