Oil unstable over increasing US-China tensions

LONDON, June 2, 2020 – Oil was mixed on Tuesday morning in Asia, with caution over mounting US-China tensions mingling with optimism over the possibility of an extension of OPEC production cuts.

Brent oil futures rose 0.29% to $38.47 by 9:33 PM ET (2:33 AM GMT), giving up some of its earlier gains. WTI futures gained 0.23% to $35.52.

Investor caution remained after the Chinese government told state-owned traders Cofco and Sinograin on Monday to halt purchases of American soybeans and other US agricultural goods. It was also reported that Chinese buyers also cancelled some US pork orders.

These actions put a hard-won phase one of the US-China trade deal, as well as the fragile demand recovery for the black liquid, in jeopardy with tensions between the two countries continuing to mount.

Meanwhile, investors are waiting to see whether OPEC will extend the timeframe of its production cuts, which have been in place since May, into July or even August. An extension of the cuts would prevent a supply glut, with demand recovery sluggish even though more countries are loosening lockdowns and re-opening their economies.

The body will make the decision when it meets online later in the week.

“So long as the current OPEC+ compliance commitment argument for price recovery holds water, oil prices could stabilize at higher ranges,” Stephen Innes, AixiCorp chief global market strategist, told Reuters.

By Investing.com: https://www.investing.com/news/commodities-news/oil-mixed-over-continually-increasing-uschina-tensions-2189112

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