Kalkine: Oil Prices Steady Amid US-China Trade Hopes: What It Means for ASX200 Energy Outlook

June 06, 2025 11:06 AM AEST | By Team Kalkine Media

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Kalkine: Oil Prices Steady Amid US-China Trade Hopes: What It Means for ASX200 Energy Outlook — Image source: Shutterstock

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Highlights

Oil stabilises following Trump-Xi call

Brent and WTI benchmark crude prices firm up

ASX200 energy sentiment finds temporary relief

Oil markets held steady following a positive development in US-China relations, as US President Donald Trump and Chinese President Xi Jinping agreed to resume trade negotiations. This renewed diplomatic activity helped lift market sentiment, offering temporary relief to oil prices that have faced headwinds from trade tensions and global demand uncertainty.

West Texas Intermediate (WTI) crude hovered near US$63 a barrel, showing signs of resilience after weeks of volatility. Meanwhile, Brent crude closed above US$65 on Thursday, supporting optimism that geopolitical dialogue could stabilise global trade flows and energy demand.

ASX200 Energy Stocks Respond to Oil Price Stability

This rebound in oil benchmarks has implications for energy-related firms within the ASX200 index. Stocks such as Santos (ASX:STO) and Woodside Energy Group (ASX:WDS) showed improved sentiment in the wake of stabilising crude prices, aligning with broader investor interest in resource-driven sectors.

The oil market had been trading within a tight range since mid-May, as traders balanced the potential for improved trade relations against the prospect of increased supply from OPEC+ nations. Any move by OPEC+ to expand production could dampen the upside for prices, especially amid an already forecasted supply surplus in the second half of 2025.

Tariff Concerns and Global Energy Demand

Despite the temporary rebound, oil futures remain down around 12% year-to-date. The ongoing concern is that continued tariff pressures and geopolitical uncertainty could slow industrial activity and energy demand, particularly in large consumption markets like the US and China.

The interplay between global macroeconomic trends and commodity pricing continues to impact not just international benchmarks but also local investment themes. For instance, market watchers tracking ASX dividend stocks are keeping a close eye on commodity-linked earnings, given their implications for income-oriented portfolios.

Looking Ahead

Investors remain attentive to upcoming trade discussions, OPEC+ supply decisions, and global economic indicators that could shape the direction of oil markets. For the Australian equity market, particularly constituents within the ASX200, stabilising energy prices could provide short-term support — but broader trends will be driven by the success of trade diplomacy and supply-side responses.

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