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What’s happening: Crude oil rose sharply on Thursday on prospects of a breakthrough in the US-China trade talks.
What happened: US President Donald Trump had reported a “breakthrough” trade deal with the UK on Thursday.
Prospects of the US meeting China over the weekend supported crude oil, while strength in the US dollar limited the overall gains.
Why it matters: US Treasury Secretary Scott Bessent is scheduled to meet China’s lead economic official, He Lifeng, on May 10 in Switzerland to hold trade talks in a bid to end the conflict triggered by the Trump administration’s high tariffs.
The ongoing trade tensions between the US and China have fuelled concerns over lower global demand for crude, as these are the world’s two largest economies. Markets responded positively to indications of diplomatic engagement between the two nations.
Meanwhile, Trump announced a trade deal with the UK, which includes fewer restrictions on exports from the US. The UK also agreed to cut its tariffs on US goods from 5.1% to 1.8%, which also provided a boost to the overall market sentiment.
On the supply side, OPEC+ (Organization of the Petroleum Exporting Countries and its allies) is looking to raise oil output, which could keep crude oil prices in check.
Citi Research analysts slashed their three-month price outlook for Brent from $60 to $55 a barrel, while keeping their long-term target unchanged at $60 a barrel for the year.
Strength in the US dollar weighed on crude oil prices, as a higher greenback makes commodities more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained sharply to 100.64 on Thursday.
Brent crude futures jumped $1.72, or 2.8%, to close at $62.84 a barrel on Thursday, while US WTI (West Texas Intermediate) crude surged $1.84, or 3.2%, to settle at $59.91.
In other energy trading, gasoline settled at $2.0854 a gallon, while heating oil closed at $2.0400 a gallon and natural gas at $3.933 per million British thermal units.
What to watch: Investors will continue monitoring geopolitical developments, including the US-Iran nuclear agreement and ongoing tensions between India and Pakistan, which are expected to significantly impact oil markets.
Data on Baker Hughes crude oil rigs from the US (2100 UAE Time) will also remain in focus today. Crude oil rigs in the US fell to 479 in the May 2 week, from 483 in the previous week, reaching the lowest level since late-January.
Context: Bitcoin prices rose sharply this morning after the US announced a trade deal with the UK.
Details: The surge in Bitcoin prices came after US President Donald Trump announced a preliminary trade deal with the UK, which is the first agreement since the imposition of tariffs by the US last month.
Trump also signalled several other deals and indicated easing of tariffs levied on China, depending on the outcome of their trade talks in Switzerland.
Two states in the US also passed legislation to allow creating strategic Bitcoin reserves, providing a further boost to crypto prices. Moreover, the Office of the Comptroller of the Currency allowed US banks to provide crypto-related services, including crypto custody, to their customers.
Bitcoin, the largest cryptocurrency by market capitalisation, jumped more than 4% in the past 24 hours to trade at $102,928 this morning. Ethereum, the world’s second-largest crypto, surged sharply to $2,200.
What to watch: Investors will continue monitoring upcoming trade talks between the US and China.
Other Markets: European indices closed mostly higher on Thursday, with the DAX 40, CAC 40 and STOXX Europe 600 Index up by 1.02%, 0.89% and 0.40%, respectively, and the FTSE 100 down by 0.32%.
Following talks with Ukrainian President Volodymyr Zelenskyy, US President Donald Trump urged a 30-day unconditional ceasefire between Russia and Ukraine. The news sent the RUB/USD pair lower in forex trading this morning.
Japan’s foreign reserves rose by $25.74 billion to $1.3 trillion in April. This being the strongest level since mid-2022 lent support to the JPY/USD forex pair.
Indonesia’s motorbike sales dipped by 24.9% in April, after a 6.8% decline in March, which sent the IDR/USD pair lower in forex trading this morning.
Argentina’s industrial production jumped by 5.2% year-over-year in March. This being the fourth straight month of growth lent support to the ARS/USD forex pair.
South Korea’s current account surplus widened to $9.14 billion in March, from $7.18 billion in the previous month. However, the KRW/USD pair fell in forex trading this morning.
Italy’s industrial production (1200 UAE Time), India’s bank loan growth (1530 UAE Time), deposit growth (1530 UAE Time) and foreign exchange reserves (1530 UAE Time), Brazil’s inflation rate (1600 UAE Time), Mexico’s consumer confidence (1600 UAE Time), auto exports (1600 UAE Time) and auto production (1600 UAE Time), UK’s NIESR monthly GDP tracker (1600 UAE Time), Canada’s unemployment rate (1630 UAE Time), employment change (1630 UAE Time), participation rate (1630 UAE Time) and average hourly wages (1630 UAE Time), as well as US Fed Kugler speech (1630 UAE Time), Fed Goolsbee speech (1800 UAE Time), Fed Waller speech (1930 UAE Time) and Fed Williams speech (1930 UAE Time).
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