Oil steady amid economic concerns, US rate decision awaited
Brent crude futures were up 1 cent at $70.05 a barrel at 0610 GMT, while U.S. West Texas Intermediate crude was at $66.69, down 2 cents.
Both contracts settled more than 2% higher in the previous session, and Brent touched its highest level since July 18 on Monday.
The trade agreement between the United States and the European Union, while imposing a 15% import tariff on most EU goods, sidestepped a full-blown trade war between the two major allies that would have rippled across nearly a third of global trade and dimmed the outlook for fuel demand.
The agreement also calls for $750 billion of EU purchases of U.S. energy in the coming years, which analysts say the EU has virtually no chance of meeting, while European companies are to invest $600 billion in the U.S. over the course of President Donald Trump's second term.
While the U.S.-EU trade deal finalisation came as a relief for global markets amid heightened uncertainty, the timeline and milestones targeted for the investments are unclear, said ANZ analysts in a note.
"We think the 15% rate will pose headwinds to the Euro area's growth outlook but is unlikely to push the economy into recession."
Meanwhile, top economic officials from the U.S. and China met in Stockholm on Monday for more than five hours of talks to resolve longstanding economic disputes at the centre of a trade war between the world's top two economies. The discussions are expected to resume on Tuesday.
Oil market participants are also awaiting the U.S. Federal Open Market Committee meeting on July 29-30, where the Fed is widely expected to hold rates but could signal a dovish tilt amid signs of cooling inflation, said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova.
"Momentum favors the upside in the near term, but the market is vulnerable to volatility triggered by central bank surprises or a breakdown in trade negotiations," said Sachdeva.
"The likelihood of an economic slowdown and the Federal Reserve's potential rate cuts remain uncertain, limiting the upside in oil."
Meanwhile, Trump set a new deadline on Monday of "10 or 12 days" for Russia to make progress toward ending the war in Ukraine or face sanctions. Trump has threatened sanctions on both Russia and buyers of its exports unless progress is made. - Reuters
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