Oil prices rise on hopes of U.S.-China trade talks

Investing.com-- Oil prices rose Wednesday on increased optimism of trade talks between China and the United States, though gains were capped by continued fears the U.S. trade tariffs will erode global demand.

At 08:10 ET (12:10 GMT), Brent Oil Futures expiring in June gained 0.9% to $65.22 per barrel, and West Texas Intermediate (WTI) crude futures rose 0.9% to $61.86 per barrel.

Both contracts remain close to four-year lows hit last week, down around 13% this month, as U.S. President Donald Trump’s escalating tariffs, combined with rising output from the OPEC+ group, weighed heavily.

China open to trade talks?

However, sentiment received a boost earlier Wednesday after Bloomberg reported that China is open to beginning trade talks with the Trump administration, but is demanding that the White House show more respect.

This comes after U.S. Vice President JD Vance said earlier this month that the U.S. trades with "Chinese peasants," a remark that drew widespread condemnation from China.

Citing a person familiar with the Chinese government’s thinking, Bloomberg also reported that Beijing would like to see a more consistent U.S. position on trade and a willingness to discuss Chinese concerns around sanctions and Taiwan.

China Q1 GDP beats estimates; March factory activity jumps

The crude market had also received a boost when data showed the China’s economy grew faster than expected in the first quarter.

Gross domestic product expanded by 5.4% year-on-year in the first quarter, beating the 5.2% consensus forecast and matching the pace of the previous quarter.

Chinese industrial production also surged 7.7% in March, and retail sales rose 5.9%.

Indications of economic strength at the world’s largest oil importer have been received well, but it could also dim hopes for imminent policy easing as authorities appear inclined to assess further data before introducing new stimulus measures, according to Bank of America.

“The upside surprise in Q1 GDP and March activity growth suggests that the Chinese economy was in decent shape in 1Q before trade tensions escalated quickly in April,” BofA economists said in a note.

IEA cut 2025 global oil demand growth forecast

However, doubts still exist about the strength of the global economy, especially after the International Energy Agency on Tuesday cut its forecasts for global oil demand growth to 730,000 barrels per day (bpd) this year from 1.03 million bpd, and to 690,000 bpd next year, citing escalating trade tensions.

“With arduous trade negotiations expected to take place during the coming 90-day reprieve on tariffs and possibly beyond, oil markets are in for a bumpy ride and considerable uncertainties hang over our forecasts for this year and next,” the IEA said in a statement.

The downgrade follows the Organization of the Petroleum Exporting Countries (OPEC) revising its global oil demand growth forecast for 2025, reducing it by 150,000 barrels per day (bpd) to 1.30 million bpd. 

In its monthly report, OPEC also lowered its projections for global economic growth for both 2025 and 2026. 

(Ayushman Ojha contributed to this article.)