Brent Crude Soars Above $65 Amid US – China Trade Agreement

Brent Crude soared above $65 per barrel on May 12, 2025, climbing 2.37% to $65.40, fueled by a US-China 90-day tariff suspension that sparked a wave of risk-on sentiment across global markets. The temporary trade détente, easing tensions between the two economic giants, has bolstered expectations for stronger oil demand, particularly from China, a major Brent-linked crude importer. As geopolitical fears recede and macroeconomic optimism grows, market attention now turns to upcoming US economic data for further price direction, with Brent testing key technical levels in a buoyant trading session.

The US-China tariff rollback, reducing duties to 10% on US goods and 30% on Chinese imports, has invigorated risk-sensitive assets, including commodities and equities, with the Dow Jones up 1.6% to 41,113 and the S&P 500 gaining 0.2% to 5,617. China’s role as a leading oil consumer amplifies the deal’s impact, as improved trade conditions are expected to spur industrial activity in fuel-heavy sectors like manufacturing, logistics, and shipping. While the truce is temporary and subject to renegotiation, its immediate effect has alleviated concerns of a global economic slowdown, driving Brent’s rally and reinforcing demand optimism.

Brent’s trajectory now hinges on critical US data releases, starting with Tuesday’s Consumer Price Index (CPI), forecasted at a steady 2.4% year-over-year, which will shape Federal Reserve policy expectations. A higher-than-expected CPI could signal tighter monetary policy, strengthening the US Dollar (DXY at 101.60) and potentially curbing oil demand, while a softer reading might sustain the risk-on mood, supporting Brent. Additionally, the American Petroleum Institute (API) and US Energy Information Administration (EIA) inventory reports, due Tuesday and Wednesday, will offer insights into US consumption trends. A significant stockpile draw could tighten supply perceptions, lifting Brent further, whereas an unexpected build might cap gains by hinting at oversupply.

Technically, Brent Crude hit a session high of $66.87, surpassing the 20-day Simple Moving Average (SMA) at $63.84 but falling short of the 38.2% Fibonacci retracement at $67.21. The 50-day SMA at $67.45 looms as a formidable resistance, with the psychological $66 level also posing a challenge. The rally reflects renewed market confidence, but Brent’s ability to sustain gains depends on the interplay of US economic indicators and global trade developments, as traders weigh the balance between supply dynamics and demand expectations in this evolving landscape.