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Oil prices advanced on Monday as upbeat signals from U.S.-China trade negotiations boosted sentiment across global markets, raising hopes that the world’s two largest crude consumers may be moving closer to resolving their prolonged tariff dispute.
Brent crude futures climbed 43 cents, or 0.67%, to $64.34 a barrel by 05:00 GMT, while U.S. West Texas Intermediate (WTI) crude rose 48 cents, or 0.79%, to $61.50 a barrel. The gains extended a strong rally from Friday, when both contracts rose by more than $1, rounding off a weekly gain of over 4%—their first since mid-April.
Trade Optimism Lifts Crude Demand Outlook
The gains were driven by renewed optimism in global trade after U.S. and Chinese officials concluded their weekend trade talks in Switzerland on a positive note. U.S. Treasury Secretary Scott Bessent described a “deal” to reduce the American trade deficit, while China’s Vice Premier He Lifeng said “important consensus” had been reached. Although both sides refrained from providing concrete details, a joint statement is expected later Monday.
Investors are betting that progress in trade talks could restore disrupted supply chains and reignite economic activity, thereby lifting global oil demand. Trade tensions and aggressive tariffs imposed over the past year had cast a long shadow over fuel consumption forecasts.
OPEC+ Output Dynamics Remain in Focus
Despite the positive trade signals, market participants remain wary of supply-side risks. The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, are set to accelerate oil output hikes in May and June. This strategy aims to unwind previous production cuts, potentially flooding the market with additional supply.
However, a Reuters survey revealed that OPEC oil output unexpectedly fell in April, as declines in Libya, Iraq, and Venezuela outpaced planned increases.
Geopolitical Developments Add Complexity
Adding to the supply-side narrative, U.S.-Iran nuclear negotiations concluded Sunday in Oman with plans for further discussions. Tehran has remained firm on continuing its uranium enrichment activities, a sticking point in the talks. A potential U.S.-Iran nuclear deal could pave the way for easing sanctions and returning Iranian crude to the global market, a move that may exert downward pressure on oil prices.
Meanwhile, U.S. energy firms cut the number of active oil and gas rigs to their lowest level since January, according to Baker Hughes. The decline in rig counts may signal weaker short-term production growth in the U.S., partially offsetting global supply concerns.
Outlook
While near-term momentum remains supported by trade optimism and reduced U.S. rig activity, oil markets are likely to remain volatile in the coming weeks. Traders will closely monitor developments from the U.S.-China trade talks, the release of the joint statement, OPEC+ production trends, and progress on the Iran nuclear front for further directional cues.
