WTI strives to break above $60 on hopes of de-escalation in US-China trade war

• The Oil price aims to extend recovery above $60.00 on hopes that the US-China trade war has peaked out.
• The US and China are set to meet for trade discussions this week.
• OPEC+ has announced that it will speed up oil production at a higher rate.

West Texas Intermediate (WTI), futures on NYMEX, aims to extend its two-day recovery move above the key resistance of $60.00 during European trading hours on Wednesday. The outlook for the Oil price has improved in the near term on hopes of a de-escalation in the trade war between the United States (US) and China.

On Tuesday, US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer confirmed that they will meet their Chinese counterparts for trade and economic discussions this week in Switzerland.

Bessent signaled that discussions will be more about de-escalating the tariff war, as high-level duties imposed by both nations on each other are not sustainable in the long run. My sense is that this will be about de-escalation, not about the big trade deal," Bessent said, according to CNBC.

Currently, the US and China have increased tariffs on each other by 145% and 125%. Initially, the US imposed a 54% additional levy on China, inclusive of a 20% tariff punishment for pouring drugs into America, and increased to 145% after Beijing retaliated with counter-tariffs.

Diminishing fears of a US-China trade war are favorable for the Oil price, given that China is the largest importer of Oil in the world.

Meanwhile, the OPEC+ decision to speed up the unwinding of phased-out production cuts by 2.2 million barrels per day (bpd) since September 2022 would limit the upside in the Oil price. Over the weekend, the oil cartel announced that it will accelerate the pace of production hikes to 960,000 in June due to non-compliance with OPEC+ rules by Kazakhstan. In late April, Kazakhstan said that capacity underutilization due to quotas imposed by the OPEC+ is harming its oil fields, and it will prioritize its national interest over the group's objectives.