Oil prices cleared the $60/bbl hurdle in early morning trading, though prices have since come off a bit. Crude oil is currently trading at $58.96, having sunk to just 49 cent gains.
Fuel prices are also moving higher as rising crude prices boost the overall market. Diesel is trading at $1.9497, up a penny from Friday’s close. Gasoline prices are $1.9231, up 2.7 cents.
The key takeaway from the G20 Summit was what’s being called a “trade truce” between the US and China. Trump’s plans to delay imposing 25% tariffs on the second half of imports from China, though roughly $250 billion in goods remain subject to tariffs. Trump announced that China will open its market to US agriculture, though Chinese reports have not echoed this announcement. Negotiations resume once again after six weeks without progress, though many have pointed out that a deal likely won’t materialize until after the 2020 elections. China will wait to see how political leanings evolve heading into the election, as a new administration would potentially be more accommodating in negotiations.
Another important development at the G20 was Russia’s announcement of support for extending OPEC+ production cuts another 6-9 months. Until now, Russia has been the main holdout on extensions, waffling between the need for higher prices and maintaining market share. With both Saudi Arabia and Russia now aligned on production cuts, a extension is all but guaranteed at the OPEC meeting this week. The most recent set of cuts expired at the end of June, requiring extensions to remain in force. Russia’s announcement was significant for two reasons: first, it solidifies Russia’s authority to influence OPEC policy and second, it’s the first indication from the group that cuts may need to extend into 2020. CME data suggests markets are expecting deeper cuts coming out of this week’s meeting, so markets may fall slightly if OPEC merely extends current quotas.