Oil prices climb to new highs on U.S.-China trade progress

Investing.com-- Oil prices rose to new highs Wednesday as traders digested the outcome of crucial U.S.-China trade talks in London.

At 06:00 ET (10:00 GMT), Brent Oil Futures gained 1% to $67.53 per barrel and West Texas Intermediate (WTI) crude futures rose 1.1% to $65.71 per barrel.

Both benchmarks had posted their highest levels since April during the previous session.

U.S.-China trade framework provides support

U.S. and Chinese officials concluded two days of intense trade negotiations in London, agreeing on a framework aimed at rejuvenating the Geneva truce and resolving export control disputes. 

The deal “puts meat on the bones” of previous understandings by addressing reciprocal restrictions on critical technologies, U.S. Commerce Secretary Howard Lutnick said on Tuesday.

China agreed to ease rare‑earth and magnet export curbs, while the U.S. will roll back some export controls on semiconductors and related tech.

Lutnick and Chinese Vice Commerce Minister Li Chenggang affirmed both governments will now seek formal sign‑off from Presidents Trump and Xi before implementation. 

While the framework is still preliminary and lacks granular details, its announcement uplifted sentiment by defusing escalating tariff and supply chain tensions.

U.S.-Iran nuclear talks stumble

Also providing a degree of support is the apparent lack of progress in the Iran-U.S. nuclear talks.

The next round is due this week, with Trump saying negotiations would be held on Thursday while Tehran says they will take place on Sunday in Oman.

If nuclear negotiations fail and conflict arises with the United States, Iran will strike American bases in the region, Defence Minister Aziz Nasirzadeh said on Wednesday, raising the temperature surrounding the negotiations somewhat.

"Nuclear talks between Iran and the US don’t appear to be progressing, providing some tailwinds for prices. Iran is not willing to compromise on its right to enrich uranium, something the US won’t accept," said analysts at ING, in a note. 

Investors assess demand outlook; API weekly data in focus

U.S. crude oil output is expected to decline next year due to reduced drilling activity driven by weaker commodity prices, the U.S. Energy Information Administration said Tuesday in its monthly report.

The EIA also cut its global oil demand forecast for this year by roughly 200,000 barrels per day to 103.5 million bpd, pointing to weaker consumption in developed countries.

"Given our view that oil prices will be lower towards the end of this year, there’s scope for further downward revisions in U.S. crude oil output estimates for next year," ING analysts said in a note.

This comes amid steady production increases by the oil-producing cartel, OPEC+, which underscores an oversupply scenario.

Meanwhile, the U.S. crude inventories fell by 370,000 barrels for the week ending June 6, according to data released Tuesday by the American Petroleum Institute. 

The decline was in contrast to analysts’ expectations of a rise by 700,000 barrels. 

The API data is closely watched as a precursor to the official weekly report from the U.S. Energy Information Administration, which is due on Wednesday.

Ayushman Ojha contributed to this article