Crude oil prices advanced on Monday as renewed optimism surrounding trade negotiations between the United States and China supported expectations of improved global demand.
Brent crude oil, against which Nigerian oil is priced, rose 43 cents or 0.67% to $64.34 a barrel by 06:00 a.m. in Nigeria while U.S. West Texas Intermediate (WTI) crude gained 48 cents or 0.79% to trade at $61.50 a barrel.
The gains build on last week’s momentum, where both benchmarks climbed over 4%, marking their first weekly increase since mid-April.
The market reaction follows positive statements from both U.S. and Chinese officials over the weekend, indicating substantial progress in trade talks. U.S. negotiators reported a “deal” aimed at reducing the U.S. trade deficit while Chinese authorities said “important consensus” had been reached.
Analysts noted that the shift in sentiment suggests potential restoration of trade flows between the world’s two largest crude consumers, which could bolster global oil demand in the second half of the year.
“Optimism over constructive U.S.-China talks supported sentiment, but limited details and OPEC’s plan to raise output capped gains,” said Toshitaka Tazawa, analyst at Fujitomi Securities.
On the supply side, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, are expected to increase output through May and June.
This has introduced caution into the market as increased supply could pressure prices if demand does not recover in parallel.
Despite these plans, a Reuters survey found that OPEC’s oil production edged lower in April, suggesting continued discipline among member countries.
Meanwhile, U.S.-Iran talks aimed at resolving long-standing disputes over Tehran’s nuclear programme concluded in Oman on Sunday, with further negotiations planned. While Iran continues to insist on advancing its uranium enrichment programme, the prospect of a renewed nuclear deal remains a variable that could increase global supply and weigh on prices.
Domestically, U.S. energy firms reduced the number of active oil and gas rigs to the lowest level since January, according to data from Baker Hughes.
The decline in rig count indicates potential tightening in future output, which may lend support to prices in the near term.
While geopolitical developments and OPEC+ policy remain key market drivers, the market’s focus this week will remain on the final outcome of the U.S.-China trade negotiations and any subsequent impact on global economic growth and energy demand.
