It looks set to be a very positive day of trade for Australia’s leading energy producers on Wednesday after oil prices surged higher overnight.
According to Bloomberg, the WTI crude oil price has climbed 3.7% higher to US$57.01 a barrel and the Brent crude oil price has stormed 4.5% higher to US$61.21 a barrel.
Why did oil prices surge higher?
Traders were buying oil overnight after the United States Trade Representative (USTR) office revealed that new tariffs on certain Chinese consumer items would be delayed until December.
The USTR also announced that some products were being removed from the new China tariff list altogether. The office stated that “products are being removed from the tariff list based on health, safety, national security and other factors and will not face additional tariffs of 10 percent.”
According to CNBC, the USTR advised that the delay affects electronics including mobile phones, laptops, video game consoles, some clothing products and shoes, and toys.
This has eased concerns over an escalating trade war between the two nations. And as there had been concerns that the trade war would impact global economic growth and ultimately lessen demand for oil, the outlook for energy consumption has improved greatly overnight.
What else could rise?
It won’t just be the energy producers pushing higher today. I suspect that Australian tech shares such as Appen Ltd (ASX: APX), Nearmap Ltd (ASX: NEA), and WiseTech Global Ltd (ASX: WTC) could be amongst the best performers on the market after their U.S. counterparts raced higher.
Late in the U.S. session the technology-focused Nasdaq index is up a sizeable 1.9%. And as the local tech sector tends to follow its lead, it bodes well for the day ahead.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of WiseTech Global. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. The Motley Fool Australia owns shares of Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.