WTI Crude Oil Holds Below $64 as US-China Trade Truce Lifts Market Sentiment

WTI Crude Oil Holds Below $64, But Outlook Improves on US-China Trade Truce

West Texas Intermediate (WTI) crude oil is trading around $63.90 per barrel on Monday, paring recent losses after a two-day winning streak. Despite a mild pullback, sentiment around oil prices remains constructive due to relaxing trade tensions between the US and China, and better-than-expected US job data, both of which are key drivers for oil demand recovery.

US-China Trade Truce Eases Tariff Pressures on Oil

Markets welcomed news that US President Donald Trump held a “positive and constructive” 90-minute call with Chinese President Xi Jinping late last week. As a follow-up, top US officials including Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer are scheduled to meet their Chinese counterparts in London today.

This renewed diplomatic engagement is easing global demand fears, which had been undercut by trade-related tensions and tariffs. A potential resolution to these trade issues could provide a tailwind to global oil consumption, particularly in industrial and transportation sectors.

Economic Tailwinds: US Jobs Data Supports Demand Narrative

Also supportive of crude prices is the latest Nonfarm Payrolls (NFP) report from the US:

139,000 new jobs added in May (vs. 130,000 expected)
Unemployment Rate: Steady at 4.2%
Average Hourly Earnings: Unchanged at 3.9%, exceeding forecasts

These figures dispel fears of a near-term economic slowdown and suggest a resilient labor market, which further supports fuel demand growth in the US economy.

Monetary Policy Outlook: Fed Rate Cuts Still Expected

Despite Friday's strong labor data, Citigroup maintains its forecast that the Federal Reserve (Fed) will introduce three 25 basis point rate cuts in September, October, and December. Expectations of looser monetary policy continue to provide a favorable backdrop for commodities, including crude oil, by weakening the US Dollar and stimulating economic activity.