Oil rebounds after hitting five-month lows

Brent crude futures climbed 92 cents, or 1.47%, to $63.65 a barrel after settling down 3.82% on Friday to the lowest since May 7

Oil prices rose on Monday after hitting five-month lows in the previous session, as investors hoped potential talks between the presidents of China and the U.S. could ease trade tensions between the world’s two largest economies and oil consumers.

Brent crude futures climbed 92 cents, or 1.47%, to $63.65 a barrel by 0408 GMT after settling down 3.82% on Friday to the lowest since May 7.

U.S.-China trade tensions flared up last week after China expanded its rare earth export controls and drew a response from U.S. President Donald Trump on Friday to impose 100% tariffs on China’s U.S.-bound exports, along with new export controls on “any and all critical software” by November 1.

The moves come ahead of a potential Trump-Xi meeting on the sidelines of the Asia-Pacific Economic Cooperation forum in South Korea, which U.S. Trade Representative Jamison Greer said could still happen later this month.

The most likely scenario seems to be that both sides pull back on the most aggressive policies and that talks lead to a further – and possibly indefinite – extension of the tariff escalation pause reached in May, Goldman Sachs analysts said in a note.

However, there is still the risk of trade tensions escalating that may lead to higher tariffs or more serious export restrictions, at least temporarily, they added.

Oil prices tumbled in March and April during the height of trade tensions between the two countries.

China’s crude imports in September rose 3.9% from a year earlier to 11.5 million barrels per day, customs data showed, as refineries operated at their highest utilisation rates so far this year and as stockpiling efforts continued.