Oil Prices Rise Amid US-China Trade Developments and Russian Sanctions Impact

Oil prices experienced a modest uptick during trading on Monday, supported by favorable developments in trade relations between the United States and China, alongside the effects of Western sanctions on Russia's energy sector.

Brent crude futures rose by 0.1% to $66.05 per barrel, while West Texas Intermediate (WTI) futures increased by 0.2% to $61.62, following weekly gains of 8.9% and 7.7% respectively, driven by US and European sanctions against Russia.

In an analysis note, Haitong Securities stated that "market outlook has improved following new sanctions against Russia and the easing of tensions between the US and China, which has helped alleviate concerns over a potential oversupply of crude that had previously depressed prices earlier in October."

This positive shift came after US Treasury Secretary Scott Pruitt announced on Sunday that senior economic officials from both nations had reached a "very substantial framework" for a trade agreement during their meeting in Kuala Lumpur. Pruitt confirmed that this framework would allow President Donald Trump and Chinese President Xi Jinping to discuss trade cooperation later this week, adding that the agreement would prevent the imposition of 100% tariffs on Chinese goods and delay China's export controls on rare earth minerals.

President Trump expressed optimism regarding a potential agreement with China, indicating the possibility of meetings in both China and the US.

Market analyst Tony Sycamore from IG noted that "the framework of the trade agreement helps to offset concerns that Russia might evade new US sanctions targeting Rosneft and Lukoil by offering deeper discounts and utilizing shadow fleets to attract buyers."

However, Yang An, an analyst at Haitong Securities, cautioned that "if the sanctions on Russia's energy sector prove less effective than anticipated, upward pressure on supply could return to the market."