Oil prices rose on Monday (October 13th) after assurances that US President Donald Trump would meet with Chinese President Xi Jinping by the end of October. This eased escalating trade tensions between the world's two largest economies, which had pushed crude prices to a five-month low on Friday.

Brent crude closed up 59 cents, or 0.9%, at $63.32 per barrel, while US West Texas Intermediate crude also closed up 59 cents, or 1%, at $59.49 per barrel.

Both contracts fell about 4% on Friday, hitting their lowest levels since May, after Trump threatened to cancel the meeting with Xi and impose steep new tariffs on Chinese imports. However, US Treasury Secretary Scott Bessent said on Monday that a meeting between the US and Chinese leaders remains on track, scheduled for South Korea in late October, and noted substantial communication between the two sides over the weekend.

"We've substantially de-escalated tensions," Bessent said in an interview with Fox Business Network. The market sell-off now appears to be limited by Washington and Beijing's willingness to negotiate, said DBS analyst Suvro Sarkar, adding that the near-term outlook depends on the final outcome of the trade talks.

Oil prices plummeted in March and April at the height of trade tensions between the two countries. "Any reduction in international trade will only be negative for oil," PVM energy analysts said in a note to clients.

On the demand side, China's crude oil imports in September rose 3.9% from a year earlier to 11.5 million barrels per day, according to customs data.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) maintained its relatively high global oil demand growth projections for this year and next. In its monthly report on Monday, OPEC implied that the oil market would experience a much smaller supply deficit in 2026 as the broader OPEC+ group continues to push for increased production.

Meanwhile, the prospect of peace in the Middle East limited oil price gains. The Palestinian militant group Hamas released the last 20 surviving Israeli hostages on Monday under a US-brokered ceasefire deal.

Trump proclaimed a "historic dawn of a new Middle East" after two years of war in Gaza. However, traders want to see the peace endure before factoring it into their bets on oil prices, PVM analysts noted.

"The (oil) market has been skeptical, with price sentiment, of any bullish influence on the recent outbreak of violence, and the market will also be waiting for evidence of a ceasefire that will last more than a few days," PVM analysts said. (alg)

Source: Reuters