Oil Steadies as Traders Await Key Talks Between US and China

Wed, May 7, 2025

(Bloomberg) -- Oil steadied as traders awaited US-China trade negotiations that may significantly impact the outlook for global growth and energy demand.

West Texas Intermediate futures erased gains after briefly topping $60 a barrel earlier, following a 3.4% increase on Tuesday. US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will meet with Chinese officials in Switzerland later this week, the first confirmed discussions since President Donald Trump imposed sweeping tariffs.

Oil has trended lower since late January due to escalating trade frictions and plans by OPEC+ to keep boosting idled supply, but prices have moved away from their lows in the last couple of days.

The decline in crude prices will likely lead to falling American shale output, according to Diamondback Energy Inc., the largest US independent oil producer in the Permian Basin. In another sign of the hit to output, the Energy Information Administration cut its forecast for US crude production this year for a second straight month.

Meanwhile, the industry-funded American Petroleum Institute reported US crude stockpiles shrank by 4.49 million barrels last week. Inventories also slipped at the Cushing, Oklahoma, oil storage hub. Government figures are due later on Wednesday.

“Some glimmers of hope now that US and China will start to talk trade” helped support prices, said Bjarne Schieldrop, chief commodities analyst at SEB AB. Prices were also helped by signs of falling US stockpiles and lower shale production, he added.