April 10 (UPI) — A thaw in the trade relationship between China and the United States and talk of $80 oil put crude oil prices squarely in rally mode in Tuesday trading.
Without naming specifics, Bloomberg News reported Tuesday that Saudi Arabia is gunning for $80 for the price of oil to build value for the initial public offering of Saudi Arabian Oil Co., known also as Saudi Aramco.
The report stated that Riyadh was careful not to put a target on the price of oil, though “people who have spoken to them” said the goal was $80 per barrel.
Usually any talk from Saudi Arabia, the de facto head of the Organization of Petroleum Exporting Countries, is a catalyst for a spike in crude oil prices. As of 9:15 a.m. EST, the price for Brent crude oil was up 1.88 percent to $69.94 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 1.88 percent to $64.61 per barrel.
The rally comes two trading days after a hefty drop in crude oil prices, driven by gains in exploration and production activity in the United States. On pace to become the world’s leading oil producer, data from the United States on crude oil and gasoline inventories have been steady factors in the price of oil.
OPEC is working to drain a surplus on the five-year average in global crude oil inventories, a move that’s pulled oil up from sub-$30 levels in 2016. That’s been offset, however, by U.S. production trends.
A preview from commodity pricing group S&P Global Platts of data expected from the U.S. Energy Information Administration on Wednesday shows a forecast of a 100,000-barrel build in U.S. crude oil stocks.
“That would mark a turnaround, as stocks have tightened relative to the five-year average since in mid-September,” Platts Oil Futures Editor Geoffrey Craig said in the emailed report.
Elsewhere, broader markets were supported by an apparent walk-back on trade war rhetoric between the United States and China. Markets were hammered last week when U.S. President Donald Trump doubled down on tariffs, raising the possibility of a $100 billion trade dispute.
Chinese President Xi Jinping said on Tuesday that Beijing would follow through with a pledge to reduce tariffs on automobiles imported into the country.
Without mentioning specifics, however, the Chinese president cautioned that isolationism and protectionism were out of step with global conventions.
“Humanity has a major choice to make between openness and isolation, and between progress and retrogression,” Xi said. “In a world aspiring for peace and development, the cold-war and zero-sum mentality looks even more out of place.”