Phil Carr
The Gold & Silver Club
What a difference a week makes. Exactly this time last week, Oil was in pullback mode — now the world's number one traded Commodity is soaring back stronger than ever.
Oil prices surged to multi-month highs on Monday, turbocharged by a landmark trade agreement between the United States and China that analysts at GSC Commodity Intelligence are “calling the most asymmetric and undervalued trade of the year”.
Brent Crude – the international benchmark, soared above $66 a barrel, while West Texas Crude Oil topped $63 a barrel — with both contracts reaching levels not seen since early January. The gains come as the United States and China agreed to slash reciprocal tariffs for 90-days in a de-escalation of the trade war between the world’s two largest economies.
The deal will cut U.S duties on Chinese goods to 30% from the current 145%. Beijing said it would cut its blanket tariffs on American products from 125% to 10%. The reductions on both sides will go into effect on Wednesday.
According to GSC Commodity Intelligence – “this agreement opens the door to the most asymmetric trade setup in years”. In a note to clients, analysts stated: “We’re looking at an asset that’s been mispriced for months. Recession fears dragged Oil down, but now the macro has flipped – and the market hasn’t caught up yet. We could see a $10-$15 per barrel repricing over the coming weeks”.
Crude imports into China – already the world’s largest oil importer – climbed to 12.6 million barrels per day in April, up 7.4% from a year earlier. GSC Commodity Intelligence expects that figure to accelerate sharply as state-owned refiner’s ramp up procurement to capitalise on fire-sale prices and strengthen energy security under new trade agreement.
Beyond the new U.S-China tariff deal – a convergence of supply-side risks are also fuelling bullish sentiment. With tensions in the Strait of Hormuz and ongoing disruptions in Libya and Nigeria, the margin for supply shocks remains thin. This creates a fragile balance where even a modest demand shock could ignite a major price breakout.
And let's not forget – with inventories already drawing and summer driving season approaching fast, it won’t take much for Oil to test new multi-month and multi-year highs ahead.
As GSC’s Head of Trading, Phil Carr, put it: “Whichever way you look at it, one thing is clear. Oil is a high-conviction, high-upside trade with bullish tailwinds from every direction.”
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
Trading has large potential rewards, but also large potential risk and may not be suitable for all investors. The value of your investments and income may go down as well as up. You should not speculate with capital that you cannot afford to lose. Ensure you fully understand the risks and seek independent advice if necessary.
Recommended Content
Editors’ Picks
USD/JPY holds gains near 145.00 ahead of BoJ policy decision
USD/JPY consolidates gains near the 145.00 mark early Tuesday as traders keenly await the latest BoJ monetary policy announcements for a fresh direction. In the meantime, no US-Japan trade deal reached at the G7 Summit undermines the Japanese Yen, lending support to the pair amid a US Dollar upswing.
AUD/USD retreats toward 0.6500 amid cautious mood
AUD/USD sustains the overnight late pullback from a fresh YTD peak as rising geopolitical tensions keep investors on the edge and offer some support to the US Dollar. Trade-related uncertainties also undermine the Aussie. However, Fed rate cut bets could cap any meaningful USD appreciation and limit losses for the pair.
Gold price draws support from the global flight to safety
Gold price attracts some dip-buyers in the Asian session, reversing a part of the previous day's downfall as rising geopolitical tensions revive safe-haven demand. Bets that the Fed will resume its rate-cutting cycle in September benefit the non-yielding yellow metal, though a modest US Dollar uptick could act as a headwind.
Bank of Japan set to hold rates steady as officials mull halving the pace of tapering JGB purchases
The Bank of Japan is set to keep interest rates steady at 0.50% on Tuesday. The focus will be on the BoJ’s JGB purchases tapering plan as well as any hints on the timing of the next rate hike. The BoJ policy announcements are expected to significantly impact the Japanese Yen.
Chinese data suggests economy on track to hit 2025 growth target
China's May data was mixed with strong retail sales, but soft readings on fixed-asset investment and property price. Overall, though, data suggests that China remains on track to achieve its growth target in the first half of 2025.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.