Oil tops $70 a barrel as world trade tensions ease

Oil traded above $70 a barrel as global trade tensions showed signs of easing, countering concerns that US crude stockpiles may have resumed their expansion last week.

Brent for May settlement rose 85 cents to $70.97 a barrel on the London-based ICE Futures Europe exchange, after dropping 33 cents on Monday. The global benchmark traded at a $4.64 premium to West Texas Intermediate.

WTI futures in New York rose 1.1 per cent, remaining near the year’s highest close set in January at $66.14. A resurgence in risk appetite has helped lift markets from equities to commodities after a report that the Trump administration is urging China to lower tariffs on cars during talks to calm trade tensions. Yet a small estimated increase in US inventories is keeping a lid on oil-price gains.

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Oil has recovered near January highs after US President Donald Trump last week appointed John Bolton as his national security adviser, signalling the US may pursue a more hard-line approach against Iran and disrupt outflows from the Opec member. While global stockpiles are tightening in a sign that Opec's production cuts are working, fears still remain that surging US production could thwart those efforts.

“Oil prices gained and now they’re testing this key resistance level” of the January high, said Hans Van Cleef, senior energy economist at ABN Amro. “We’re waiting for the inventory data to see if it can push prices higher. Markets expect them to remain little changed, so any surprise drop could do the trick.”

WTI crude for May delivery traded at $66.26 a barrel on the New York Mercantile Exchange, up 71 cents, at 8:39am New York time, after falling 33 cents on Monday. Total volume traded was about 31 percent below the 100-day average.