Crude oil prices rebound from 4-year low with US-China temporary trade resolution

The prolonged trade war had threatened to erode global energy consumption, coinciding with OPEC+’s decision to accelerate the return of previously curtailed oil production to the market.

Crude oil prices rebounded sharply after plunging to a four-year low earlier in the month, driven by a breakthrough in US-China trade relations. The world’s two largest economies agreed to temporarily roll back steep tariffs that had weighed heavily on global growth prospects and energy demand in recent weeks178.

US crude futures surged as much as 4.2% on Monday after the announcement that China would cut tariffs on American goods to 10% from 125%, while the United States would lower its tariffs on Chinese imports to 30% from 145%. This mutual tariff reduction, set to last for 90 days, sparked optimism among traders and prompted a wave of short covering, as the outlook for oil demand improved in the world’s largest crude importer.

The mood in the oil market shifted dramatically from the pessimism that prevailed just days earlier. The prolonged trade war had threatened to erode global energy consumption, coinciding with OPEC+’s decision to accelerate the return of previously curtailed oil production to the market. The resulting collapse in crude prices had forced some U.S. shale producers to scale back investment, particularly in the Permian Basin, while Wall Street analysts repeatedly slashed their oil price forecasts.

Oil’s slide to a four-year low in April was primarily triggered by concerns over the economic fallout from the U.S.-China trade dispute and its impact on worldwide oil demand. This occurred just as OPEC+ resolved to increase output more rapidly than anticipated, exacerbating the downward pressure on prices