Oil prices rebound on tariffs relief; heading for weekly losses

Investing.com -- Oil prices rose Friday, bouncing from earlier losses after U.S. President Donald Trump signaled an easing of his tough stance on China tariffs ahead of a meeting with Chinese President Xi Jinping. 

At 09:20 ET (13:20 GMT), Brent oil futures gained 0.2% to $61.18 a barrel, and West Texas Intermediate crude futures rose 0.2% to $57.57 a barrel.

Trump signals easing of Chinese tensions  

Trump indicated Friday that the high tariffs imposed on Chinese goods will not remain in place long-term, signaling a potential shift in U.S.-China trade relations ahead of his upcoming meeting with Chinese President Xi Jinping.

"It’s not sustainable," Trump said in an interview with Fox Business when asked whether the current tariff levels could remain. "It could stand, but they forced me to do that."

Trump revealed he will meet with Xi in South Korea in two weeks, suggesting the encounter could lead to trade negotiations. "I think we’ll be fine with China," Trump stated during the interview, a clip of which aired Friday.

Signs of cooling of tensions between the two largest economies in the world have helped boost sentiment, as a dropping of tariffs would help boost global trade and thus demand for crude. 

Weekly losses likely  

Still, both contracts were at their weakest level since early-May and were on course for weekly losses of nearly 3%, battered by concerns over sluggish demand and a looming supply glut, while a build in U.S. inventories also weighed. 

U.S. government data showed inventories increasing by 3.5 million barrels last week, much more than market expectations. 

While gasoline and distillate inventories still shrank, the broader inventory build sparked some doubts over fuel demand heading into the winter season. 

Weak economic prints from China also weighed on oil. 

Concerns over a looming supply glut resurfaced this week, after the International Energy Agency in a monthly report forecast a bigger than previously expected supply overhang in 2026.

The IEA also warned that global oil demand was deteriorating. 

Trump, Putin agree to meet in Hungary 

Elsewhere, Trump said on Thursday that he and Russian President Vladimir Putin have agreed to meet in Budapest soon to discuss the war in Ukraine, just a day before Trump will speak with Ukrainian President Volodymyr Zelensky. 

The Trump-Putin meeting, for which no date was provided, will be the second meeting between the two heads of state since an August summit in Alaska. 

Any progress towards a Russia-Ukraine ceasefire is expected to be net negative for oil prices, given that it will likely result in easing U.S. sanctions against Moscow, allowing the country to sell much more of its oil. 

Kyiv’s easing of its strikes against Russia’s oil industry could also point to fewer supply disruptions. 

Still, markets remained skeptical whether any actual agreements will be reached, given that Trump’s past meeting with Putin yielded little progress towards a ceasefire. 

Ambar Warrick contributed to this article