Crude prices rose early Friday following a report of possible concessions in trade talks between the United States and China. Photo by Monika Graff/UPI | License Photo
Jan. 18 (UPI) -- Crude oil prices were higher Friday morning as they appeared to be trailing late-Thursday equity gains after reports of renewed efforts in the trade talks between China and the United States.
West Texas Intermediate front-month future prices rose 0.9 percent to $52.84 per barrel as of 8:00 a.m. EST while Brent crude futures rose 0.9 percent to $61.71 per barrel as of the same time.
The Dow Jones Industrial Average saw a spike Thursday afternoon following a Wall Street Journal report that the United States may be working on a new initiative involving concessions in trade talks with China. The index rose 0.7 percent to 24,370.54 on Thursday, with gains late in the session following the report.
According to the report, U.S. officials were debating the possibility of easing tariffs in a bid to try to get Chinese counterparts to also make concessions.
Trade talks between the United States and China, the world's two biggest economies, have been closely followed by equity and commodity traders as a trade dispute could slow economic growth worldwide. The U.S. is demanding what it considers would be fairer trading practices by China, and is offering in exchange to reduce trade tariffs imposed last year, with more to come later this year.
"With renewed hope on trade talks with China, and output cuts by OPEC in full effect, traders are pricing in improved fundamentals," Amir Hekmati, oil futures spec trader at Lucid Energy, told UPI early Friday.
Separately, Jeff Yastine, senior research analyst at Banyan Hill Publishing, told UPI that "the oil market and equities continue to be heavily correlated with each other."
"Fears of a recession, the aftereffects of Chinese-U.S. trade tensions, and the ongoing U.S. government shutdown are largely 'priced in' to oil at these prices," Yastine added.
"What's not priced in is the eventual resolution of trade talks, as well as the impact of recently-announced Chinese economic stimulus measures," he said.
Crude oil prices have seen an increase from the holiday-shortened trading week during Christmas, which saw WTI hit levels under $43 per barrel.
WTI prices had declined from $76 per barrel in early October due to a combination of factors including rising production in the United States and concern about an economic slowdown that could reduce crude oil demand.
On Dec. 7, OPEC announced it had agreed with some non-OPEC producers to jointly work to reduce crude oil production by 1.2 million barrels per day starting Jan. 1, which has contributed to some of the recovery.