Oil set for weekly gain ahead of US-China trade talks

By Seher Dareen

LONDON, May 9 (Reuters) - Oil prices rose on Friday, poised for a weekly gain as trade tensions between top oil consumers China and the United States showed signs of easing.

Brent crude LCOc1 rose by 84 cents, or 1.3%, to $63.68 a barrel by 1303 GMT. U.S. West Texas Intermediate crude CLc1 was up 88 cents, or about 1.5%, at $60.79.

Both benchmarks were on track to rise more than 4% for the week.

Trade talks between the U.S. and China are definitely positive for oil, given that tariffs at their current extremes keep recession risks elevated, said Bjarne Schieldrop, chief commodities analyst at SEB.

U.S. Treasury Secretary Scott Bessent will meet China's top economic official Vice Premier He Lifeng in Switzerland on May 10 to work towards resolving the trade disputes that have threatened oil demand.

U.S. President Donald Trump said on Friday that China should open up its market to the United States and that 80% tariffs on Chinese goods "seems right". Current tariffs stand at 145% for China.

However, analysts noted that while the desire of both sides to cool tensions is a positive catalyst, a deal is unlikely to materialise very quickly.

Federal Reserve Bank of New York President John Williams said on Friday that the U.S.' trade policy is increasing downside risks to the economy, including the risk of slower growth, higher unemployment and somewhat higher inflation.

Chinese exports rose faster than expected in April while imports narrowed their decline, customs data showed on Friday, giving Beijing some relief ahead of the talks. TRADE/CN

On Thursday, the U.S. imposed sanctions on a third Chinese independent oil refinery for purchases of Iranian crude, ahead of a fourth round of nuclear talks in Oman this weekend.

"Further sanctions would help crude prices if it means more disruption to Iranian production," said Panmure Liberum analyst Ashley Kelty.

"If not, the forecast oversupply will only be made worse by recent OPEC+ moves to unwind quota reductions."

Adding a ceiling to oil price gains this week was the planned increase to oil output by the Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+.

However, a Reuters survey found that OPEC oil output edged lower in April as production declines in Libya, Venezuela and Iraq outweighed a scheduled increase in output.