Crude oil prices climb above $69.2 as U.S.-China trade truce and EU deal support market
By 00:00 GMT, Brent crude futures increased by 24 cents, or 0.34 percent, reaching $70.28 a barrel (currently trading above $69.2), while U.S. West Texas Intermediate crude rose 22 cents, or 0.33 percent, to $66.93 a barrel (currently trading above $66.62). Both contracts had settled more than 2 percent higher in the preceding session, with Brent achieving its peak level since July 18 on Monday.
Support from U.S.-China trade truce
The trade agreement between the United States and the European Union, while imposing a 15 percent import tariff on the majority of EU goods, averted a catastrophic trade war between these significant partners that could have reverberated across nearly a third of global trade and dampened the outlook for fuel demand.
Oil prices also gained support from reports of a potential extension of the trade truce between the U.S. and China, with senior economic officials from both nations convening in Stockholm on Monday for over five hours of discussions. These talks are anticipated to continue on Tuesday.
In the meantime, Trump set a new deadline on Monday, stating '10 or 12 days' for Russia to make headway toward ending the war in Ukraine or face potential sanctions. He has warned of sanctions against both Russia and purchasers of its exports unless notable progress is achieved.
Tuesday's subdued movements reflected investor caution in advance of the Federal Reserve meeting commencing later that day, alongside a range of significant U.S. economic data expected this week.
Read more: Oil prices rise to $68.92 as U.S.-EU trade deal eases demand concerns
OPEC+ supply compliance discussion
Market participants were also evaluating the progress of the U.S. trade deal ahead of Trump's imminent deadline. The U.S.–EU agreement, announced on Sunday, imposes a 15 percent tariff on most European exports to the United States, reduced from an initially threatened 30 percent. It includes a pledge from the EU to purchase $750 billion worth of U.S. energy products in the upcoming years.
Analysts indicated that the dual factors of diminished trade uncertainty and long-term demand commitments enhanced investor risk appetite, thereby supporting oil prices. On the supply front, an
OPEC+
panel has urged full adherence to established quotas as a ministerial meeting on August 3 prepares to deliberate on a potential production increase for September.
Investors remain cautious as they anticipate U.S. economic data and the Federal Reserve policy meeting. The central bank is set to commence its two-day gathering on Tuesday, with expectations to maintain interest rates within the 4.25 percent to 4.50 percent range.
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