WTI set for weekly gains due to renewed optimism over US-China trade deal, but upside capped by supply concerns.
The initial US-China trade agreement helped ease demand worries from the world's top two Oil consumers.
A possible US-Iran nuclear deal could result in sanctions relief and may add approximately 400,000 barrels per day to global supply.
West Texas Intermediate (WTI) Oil price continues its losing streak for the third successive session, trading around 61.10 per barrel during the early European hours on Friday. However, crude Oil prices are set for a modest weekly gain, supported by renewed optimism over United States (US)-China trade relations, which outweighed ongoing concerns about global oversupply.
Earlier this week, the US and China reached a preliminary trade agreement. The US will reduce tariffs on Chinese goods from 145% to 30%, while China will lower tariffs on US imports from 125% to 10%. This breakthrough eased demand concerns from the world's two largest Oil consumers.
However, upside momentum for Oil prices was limited by reports suggesting a potential US-Iran nuclear deal that could lead to sanctions relief. US President Donald Trump stated the US was close to an agreement, with Iran "sort of" accepting the terms. Still, sources indicated that key issues remain unresolved. According to a Reuters report citing ING analysts, a nuclear deal would reduce supply risk and allow Iran to ramp up production, potentially adding around 400,000 barrels per day to the global market.
Further pressuring crude Oil prices, US government data showed an unexpected rise in crude inventories. Meanwhile, the International Energy Agency (IEA) raised its global supply forecast by 380,000 barrels per day, citing increased output from Saudi Arabia and other OPEC+ members as they continue to unwind production cuts.
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