Oil prices hike up as China nods to larger US energy purchases

TOKYO- Oil prices advanced on Thursday, brought heavily by the very much anticipated trade pact signing between the United States and China. This guaranteed bigger increase as China is mandated to purchase increased energy supplies from the United States.

Brent LCOc1 clocked in gains with 33 cents, equivalent to 0.5% or $64.33 per barrel by 0118 GMT. In line, US raked in 28 cents, equivalent to 0.5% oe $58.09 per barrel.

China vowed to purchase an estimated $50 billion worth of US oil, liquefied natural gas, and other energy commodities for two years. This mandate was made under the Phase 1 of the Sino-US trade deal, intended to defuse their months-long trade dispute.

Though this is the case, trade sources and market analysts said China would have a hard time hitting the target and oil earnings are more likely to be restricted prior to details on how the commitments will be achieved.

“Since this deal is only a truce, without cutting import tariff(s) materially, the impact is limited,” ANZ said in a note.

“As Phase Two negotiations will track the progress of Phase One, uncertainty remains. We think the tension will re-escalate later this year,” the Australian bank said.