Crude oil prices experienced a significant rally, with West Texas Intermediate (WTI) breaking above the $100 mark, following statements by US President Donald Trump that China has agreed to purchase US crude oil. However, Chinese authorities have not confirmed this agreement, introducing some uncertainty to the announcement [1]. The Trump-Xi summit concluded with positive rhetoric but lacked concrete agreements, particularly regarding the reopening of the critical Strait of Hormuz, a key global oil transit route [1].
WTI traded at $100.05, supported by strong technical indicators such as a Relative Strength Index (RSI) of 64.22 and a positive Moving Average Convergence Divergence (MACD), signaling renewed buying momentum. If WTI consolidates above $100, the next resistance levels are identified at $103.80 and $107.35, while immediate support lies at $95.11, with further downside at $90.90 and $86.90-$87.55 [1].
Brent crude oil prices also remained elevated due to ongoing geopolitical tensions and supply concerns, particularly regarding the Strait of Hormuz. Deutsche Bank's macro strategy team highlighted that President Trump's comments about the US not needing the Strait of Hormuz to be open have intensified fears of a prolonged disruption, contributing to a potential protracted energy shock for the global economy [2]. Brent crude rose by 1.21% overnight to $107.00 per barrel, after closing little changed at $105.72 per barrel in the previous session [2].
The late-session gains in oil prices also influenced financial markets, leading to a more hawkish repricing of Federal Reserve expectations. Futures markets are now almost fully pricing in a rate hike by June 2027, with 24 basis points of tightening priced in, an increase of 5.6 basis points on the day [2].
CONCLUSION
Oil markets surged on bullish sentiment following President Trump's announcement of a potential US-China crude deal and heightened supply risks linked to the Strait of Hormuz. Both WTI and Brent prices climbed, with technical and geopolitical factors supporting the rally. The developments also contributed to a shift in Federal Reserve rate expectations, underscoring the broad market impact of the news.