Oil prices remain close to two-week highs due to a trade war reprieve and a declining dollar

Early on Wednesday, oil prices stayed close to their highest levels in two weeks. This was due to a deal between the US and China to temporarily lower their taxes on each other’s goods and the falling value of the US dollar.

It went down by 10 cents, or 0.15%, to $66.53 a barrel at 00:08 GMT. Watkins (WTI) crude oil in the U.S. fell 7 cents, or 0.11%, to $63.60. In the last session, both averages went up by more than 2.5%.

The dollar index, which compares the dollar to a group of other currencies, dropped 0.67% on Tuesday after U.S. inflation was less than expected. When the dollar gets weaker, oil costs less for people who use other currencies, which increases demand.

On Monday, the world’s two biggest economies decided to stop their trade war for at least 90 days. The U.S. will lower its tariffs on Chinese imports from 125% to 30%, and China will lower its tariffs on U.S. imports from 145% to 10%.

After the deal was made on Tuesday, prices went up more than $1.60 a barrel and ended the day up almost 3%.

While Rystad energy analysts said in a note that the deal had “eroded some demand side pessimism,” they also warned that the tariffs could still have an effect in the future.

Reports of falling gasoline and diesel stocks in the U.S. helped the market, which shows that people still want to buy fuel.

Market sources, who asked to remain anonymous, said that based on data released by the American Petroleum Institute on Tuesday, gasoline stocks dropped by 1.4 million barrels and diesel stocks dropped by 3.7 million barrels. Oil stocks, on the other hand, went up by 4.3 million barrels.

Reuters asked analysts and found that they thought gasoline stocks would drop by 600,000 barrels, distillate stocks would rise by about 100,000 barrels, and crude stocks would drop by 1.1 million barrels.

It will be released by the U.S. Energy Information Administration on Wednesday at 10:30 a.m. EDT (1430 GMT).

The market is keeping an eye on President Trump’s trip to the Gulf. To start his trip, he went to an investment forum in Riyadh on Tuesday and said that the U.S. would lift long-standing sanctions against Syria. He also got Saudi Arabia to promise to spend $600 billion in the U.S.

Mukesh Sahdev, global head of commodity markets at Rystad Energy, said that one of the president’s main goals on the trip will be to keep oil prices from going up during the busy summer travel season. He also said that the U.S. could use lower prices to buy more Middle Eastern crude for its Strategic Petroleum Reserve.

“The big unknown for the market is how U.S. actions related to Iran, Russia and Venezuela will result in supply disruptions or additions,” said Sahdev.

On Tuesday, the U.S. put new sanctions on 20 companies that it said were helping the General Staff of Iran’s Armed Forces and Sepehr Energy, the company’s front business, send oil from Iran to China.

The sanctions come after the United States and Iran held their fourth round of talks in Oman. The talks were meant to settle their differences over Iran’s nuclear program.