Oil Prices Rise on US-China Trade Optimism and Tight Gasoil Market

Oil Prices Strengthen Amid US-China Trade Hopes and Tight Gasoil Market

Crude Oil Extends Gains on Positive Trade Sentiment

Crude oil prices continued to firm early Tuesday after advancing on Monday, supported by growing optimism around the US-China trade talks. The discussions, which resumed in London, have signaled progress on critical issues like rare earth exports and US tech restrictions. Markets are hopeful that a mutually beneficial resolution could spur global economic activity and energy demand.

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Iran Nuclear Talks Stall, Adding Geopolitical Risk

In contrast to the US-China progress, nuclear talks between the US and Iran have hit a wall. Iran remains firm on its right to enrich uranium, a sticking point the US refuses to compromise on. The lack of movement here is adding geopolitical risk premium to oil prices, contributing to a more bullish market tone.

🔍 Insight: Why Iran’s Nuclear Standoff Matters to Oil Traders

China’s Crude Imports Soft, But YTD Data Remains Upbeat

According to the latest trade data, China’s crude oil imports dropped to around 11 million b/d in May, down 5.7% month-over-month and slightly below year-ago levels. This dip is partially attributed to seasonal refinery maintenance, which typically peaks in May. Despite the short-term softness, year-to-date imports are up 0.3% YoY, suggesting resilient demand.

Gasoil Market Signals Spot Tightness

The ICE gasoil market is flashing signs of spot tightness. The prompt gasoil spread has widened in backwardation to nearly $16/ton, doubling from last week’s levels. Speculative buying activity is also rising, with open interest at record highs, reflecting increasing consumer hedging and strong crack spreads.

Outlook: Bullish Momentum Building with Caution Ahead

While trade optimism and gasoil strength provide bullish cues, the market remains attentive to real policy shifts and macroeconomic data. Short-term volatility may rise if trade negotiations stall or inflation data alters central bank expectations.