Oil jumps 4% after Trump’s suspension and increasing the fees on China

Oil prices rose today more than four percent to recover from its lowest levels in four years, which had reached it early in the session, after US President Donald Trump announced that he would raise customs duties on China, but he would stop increases announced last week on most other countries.

Trump agreed to a temporary suspension for a period of 90 days as part of his customs duties plan, but he also raised the percentage of fees imposed on China to 125 percent that applies immediately.

The previously announced customs duties of 104 percent on China began on Wednesday.

Brent crude futures rose $ 2.66, or 4.23 percent, to $ 65.48 a barrel upon settlement. US West Texas Intermediate crude futures jumped $ 2.77 or 4.65 percent to $ 62.35 upon settlement.

The decades of the two times lost about seven percent earlier in the session before they bounced away.

“We have reached a turning point in the commercial conflict, as Trump gives the countries that have expressed their desire to work on an agreement to get rid of customs duties for some time to settle the matter,” said Phil Flynn, a chief analyst at the Price Future group.

“What Trump is doing is to isolate China economically,” added Flynn.

China has announced additional customs duties on American goods, as it imposed 84 percent fees on American goods as of Thursday in response to Trump’s customs duties policy.

“I think the market expects a Chinese deal to come soon … we seem to make progress in some countries that the Chinese were hoping to pressure,” said Bob Yujer, Director of Energy Futures at Mezoho.

ES Giovanni Stonovo said that the escalating trade war between China and the United States is raising fears of global recession.

He added, “While the demand for oil has not been probably affected yet, the increasing fears of the weak demand for crude during the coming months require low prices to stimulate an amendment to the supply that prevents a surplus in the market.”

And counter measures in Canada, the nearby ally of the United States and its main commercial partner, entered into force on Wednesday.

On Wednesday, European Union countries agreed to impose 25 percent customs duties on a group of American goods in a first round of counter -measures.

What has increased pressure on oil prices, OPEC decision last week increased production in May 411 thousand barrels per day, a step that analysts likely to push towards a surplus in the market.

On Wednesday, energy information management data showed that crude oil stocks in the United States increased 2.6 million barrels to 442.3 million barrels last week, compared to the expectations of analysts in a Reuters poll, an increase of 1.4 million barrels.

“The exports have declined, and we will have to see whether we will lose the ability to reach the Chinese market, and whether we will witness a decline in the export situation in the future,” said John Koldov, partner in Ajin Capital in New York.