(Bloomberg) -- Brent crude traded around $70 a barrel as a two-day rebound petered out on signs the U.S. and China are still far from reaching a trade deal.
Futures in London were little changed after rallying 3.5% over the past two sessions. President Donald Trump said the U.S. “isn’t ready” to make a trade deal with China while on a trip to Japan. Trump also reaffirmed that he’s not pursuing regime change in Iran, easing concern that oil flows in the Persian Gulf will be disrupted.
Brent has now clawed back more than half of its trade war-induced tumble of more than 6% over Wednesday and Thursday even though there hasn’t been any progress in resolving the conflict. A drop in working U.S. rigs to the lowest in more than a year had aided prices, and the supply backdrop is still rife with risks from Russia to Venezuela.
“I think the bounce we have seen in the last couple of days has taken the market by surprise,” said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific Pty in Sydney. “While supply issues certainly remain, it’s the demand picture that’s unclear,” he said, adding that oil traders have largely interpreted Trump’s trade comments as a negotiating tactic.
Brent for July settlement was steady at $70.10 a barrel on London’s ICE (NYSE:ICE) Europe Futures at 10:31 a.m. in Singapore after dropping as much as 0.4% earlier. The contract closed up 2.1% on Monday. The global benchmark was at a $10.92 premium to West Texas Intermediate crude.
WTI for July delivery gained 55 cents, or 0.9%, from Friday to $59.18 a barrel on the New York Mercantile Exchange. There was no settlement on Monday because of a public holiday in the U.S.