Oil Price Fundamental Daily Forecast – Optimism Over US-China Trade Relations Underpinning Prices

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Tuesday, but inside Tuesday’s range. The price action suggests investor indecision and impending volatility. Traders are saying positive comments from Beijing and Washington are helping to underpin prices. Putting a lid on the rally, however, are worries over lower demand growth and increasing global supply.

At 11:14 GMT, October WTI crude oil is trading $54.33, up $0.69 or +1.29% and December Brent crude oil is at $58.10, up $0.62 or +1.08%.

It’s old news, but on Monday, President Trump said he believed China was ready to resume trade talks. On Sunday, Chinese Vice Premier Liu He said China was willing to resolve the dispute through “calm” negotiations.

Shorts covered initially on the reports and today’s early price action suggests speculative buyers may be coming in to support the market on Monday.

In other news, crude oil prices fell sharply from Monday’s highs on the outlook for increased supply of Iranian crude after France’s president lifted hopes for a deal between Washington and Tehran.

French President Emmanuel Macron said preparations were underway for a meeting between Iranian President Hassan Rouhani and U.S. President Donald Trump in the coming weeks to find a solution to a nuclear standoff.

Daily Forecast

We’re looking for heightened near-term volatility in crude oil because of growing hopes that the U.S. and China could make a deal to end their trade war. At the same time, an easing of sanctions on Iran, resulting in increased oil sales could be bearish because it would flood an already saturated market with additional supply.

Later today at 20:30 GMT, traders will get the opportunity to react to the weekly inventories report from the American Petroleum Institute (API). According to a preliminary Reuters poll, U.S. crude oil and gasoline inventories likely fell during the week-ending August 23.