Oil falls as trade war concerns increase worries about fuel demand
Brent crude futures fell 52 cents, or 0.75%, to $68.69 a barrel by 0325 GMT. U.S. West Texas Intermediate crude was at $66.69 a barrel, down 51 cents, or 0.76%. Both benchmarks settled slightly lower on Monday.
The August WTI contract expires on Tuesday and the more active September contract was down 54 cents, or 0.82%, to $65.41 a barrel.
'Broad demand concerns continue to simmer amid escalating global trade tensions, especially as markets eye the latest tariff threats between major economies and Trump's potential announcements ahead of August 1 deadline,' said Priyanka Sachdeva, senior market analyst at Phillip Nova.
'Investors are also eyeing the ripple effects of fresh US sanctions on Russian crude,' she added.
Supply concerns have largely been alleviated by major producers raising output and since a ceasefire on June 24 ended the conflict between Israel and Iran. However, investors are increasingly worried about the global economy amid U.S. trade policy changes.
A weaker U.S. dollar has provided some backing for crude as buyers using other currencies are paying relatively less.
Prices have slipped 'as trade war concerns offset the support by a softer (U.S. dollar),' IG market analyst Tony Sycamore wrote in a note.
Sycamore also pointed to the possibility of an escalation in the trade dispute between the U.S. and the EU over tariffs.
The EU is exploring a broader set of possible counter-measures against the United States as prospects for an acceptable trade agreement with Washington fade, according to EU diplomats. The U.S. has threatened to impose a 30% tariff on EU imports on August 1 if a deal is not reached.
There are also signs that rising oil supply has entered the market as the Organization of the Petroleum Exporting Countries and their allies unwind output cuts.
Saudi Arabia's crude oil exports in May rose to their highest in three months, data from the Joint Organizations Data Initiative (JODI) showed on Monday.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
25 minutes ago
- Business Recorder
Oil rises on Japan trade deal and stronger demand indicated by US inventories
BEIJING: Oil prices steadied in early trading on Wednesday after falling for three consecutive sessions as a U.S. trade deal with Japan signaled progress on tariffs and a poll showed U.S. crude stockpiles fell last week, indicating stronger demand. Brent crude futures rose 33 cents, or 0.48%, to $68.92 a barrel by 0023 GMT. U.S. West Texas Intermediate crude futures rose 33 cents, or 0.51%, to $65.64 per barrel. President Donald Trump said on Tuesday that the U.S. and Japan had struck a trade deal that includes a 15% tariff on U.S. imports from Japan. He also said Japan had agreed on $550 billion in investments in the U.S. Oil had fallen in the previous session after the EU said it was considering countermeasures against U.S. tariffs, as hope faded for a deal ahead of the August 1 deadline. And U.S. crude oil stockpiles were expected to have fallen last week, along with distillate and gasoline inventories, an extended Reuters poll showed on Tuesday. Nine analysts polled by Reuters ahead of weekly inventory data estimated on average that crude inventories fell by about 1.6 million barrels in the week to July 18. U.S. crude and gasoline stocks fell last week while distillate inventories rose, market sources said, citing American Petroleum Institute figures on Tuesday. In another bullish sign for the market, the U.S. energy secretary said on Tuesday that the U.S. would consider sanctioning Russian oil to end the war in Ukraine. The EU on Friday agreed its 18th sanctions package against Russia, lowering the price cap for Russian crude. But analysts said a lack of U.S. participation would hinder the effectiveness of the package.
Business Recorder
25 minutes ago
- Business Recorder
Nikkei surges in boost to Asia as Trump announces Japan trade deal
SYDNEY: A rally in Japanese shares led Asian markets on Wednesday after President Donald Trump announced a trade deal with Japan and fuelled hopes of more to come, tempering the disappointment from U.S. earnings that highlighted the drag from higher tariffs. Trump late on Tuesday said a trade deal with Tokyo will include Japan paying a lower 15% tariff on shipments to the U.S. It followed an agreement with the Philippines that will see the U.S. collect a 19% tariff rate on imports from there. 'Expectations for a breakthrough were low, so Trump's announcement delivers a mild upside surprise — providing near-term relief for Japanese equities,' said Charu Chanana, chief investment strategist at Saxo. 'Strategically, the deal allows Japan to sidestep immediate tariff escalation, while Trump's attention shifts elsewhere.' Japan's Nikkei jumped 2.6% on Wednesday as shares of automakers surged on news the deal lowers the auto tariff to 15%, from a proposed 25%. Mazda Motor rallied 17% while Toyota Motor jumped 11%. Japanese government bonds slid, with the yields for 10-year JGBs up a whopping 8.5 bps at 1.585%, as the reduced uncertainty helped to clear the path for the Bank of Japan to resume interest rate hikes. The reaction in the yen was more muted, eking out a small 0.1% gain to 146.42 per dollar . Traders are on edge as Japanese Prime Minister Shigeru Ishiba was planning to soon decide whether to step down after assessing the outcome of the trade deal, Yomiuri newspaper said. Trump also said representatives from the European Union are coming for trade negotiations on Wednesday. That stirred hopes for a deal with Europe, as markets were worried about broader EU countermeasures amid receding signs of a trade agreement with Washington. EUROSTOXX 50 futures rose 0.8%, while Wall Street futures , were up about 0.1%. In another positive development, U.S. and Chinese officials will meet in Stockholm next week to discuss an extension to the August 12 deadline for negotiating a trade deal, Treasury Secretary Scott Bessent said. Chinese blue-chips edged up 0.3% and Hong Kong's Hang Seng index gained 0.5%. MSCI's broadest index of Asia-Pacific shares outside Japanadvanced 0.6%. Overnight, Wall Street closed mixed as investors assessed a spate of earnings that pointed to signs that Trump's trade war is hitting corporate profit margins. General Motors tumbled 8.1% after the automaker reported a $1 billion hit from tariffs to its quarterly results. Shares of RTX dropped 1.6% after the aerospace and defense giant took a hit from tariffs despite strong demand for its engines and aftermarket services. Investors are now waiting for results from Tesla and Google's parent Alphabet the Magnificent 7 stocks that have driven much of the market rally fuelled by AI optimism. In the foreign exchange market, moves are a little muted with the dollar holding onto overnight losses along with lower Treasury yields. The dollar index was flat at 97.45, having slipped 0.4% overnight for its third straight day of declines. The euro dipped 0.1% to $1.1739 after rising 0.5% overnight. Benchmark 10-year U.S. Treasury yields ticked up 2 basis points to 4.3559%, after slipping 3 bps overnight, as Trump continued to lash out at Federal Reserve Chair Jerome Powell for not cutting interest rates, although Bessent said there was no need for him to step down immediately. Bessent did say the Fed's vital independence on monetary policy is threatened by its 'mandate creep' into non-policy areas and he called on the U.S. central bank to conduct an exhaustive review of those operations. Oil prices gained a little on Wednesday. U.S. crude rose 0.4% to $65.60 per barrel, while Brent was at $68.88 per barrel, up 0.4%. Spot gold prices were steady at $3,429 an ounce.
Business Recorder
25 minutes ago
- Business Recorder
Dollar under pressure against yen after Trump announces Japan trade deal
TOKYO: The dollar was on a shaky footing against the yen on Wednesday, having lost ground overnight, after US President Donald Trump announced a trade deal with Japan ahead of an impending tariff deadline. The US currency has been one of the biggest losers since Trump announced sweeping tariffs on trading partners on April 2, only to delay and suspend most of the duties as his administration sought bilateral trade deals. In a post on Truth Social, Trump said that a tariff rate of 15% was set on imports from Japan, down from the 25% rate that was expected to take effect from August 1, and added the Asian nation will invest $550 billion in the United States. 'Dollar softness seems to be our opening proposition,' said Michael McCarthy, Market Strategist at Moomoo Australia. 'Clearly there's some dovishness infecting the market at the moment around the U.S. dollar and we're seeing that in the bond markets too.' The dollar was largely flat at 146.61 yen , having slid 0.5% in the previous session. The dollar index , which tracks the greenback against major peers, was little changed at 97.430 after a three-day decline. The gauge has lost 6.6% since Trump's 'Liberation Day' tariff announcement on April 2. U.S. Treasury Secretary Scott Bessent said on Monday the administration is more concerned with the quality of trade agreements than the timing. Asked whether the deadline could be extended for countries engaged in productive talks with Washington, Bessent said Trump would make that decision. Uncertainty over the eventual state of tariffs globally has been a huge overhang for the foreign exchange market, leaving currencies trading in a tight range for the most part, even as stocks on Wall Street have scaled fresh highs. Japan's all-important auto industry and rice imports were sticking points in protracted trade talks with the U.S. In his post on Truth Social, Trump said Japan would open to trade for U.S. cars, trucks, rice and certain agricultural products, among other items. Tariffs on Japanese autos would be set at 15%, according to a person familiar with the matter. The euro stood at $1.1739 , down 0.1%. Sterling was little changed at $1.35235 , off 0.1%. Also weighing on investors' minds were worries about Federal Reserve independence, given Trump has repeatedly railed against Chair Jerome Powell and urged him to resign because of the central bank's reluctance to cut interest rates. Bessent on Monday took a softer stance, saying there is no need for Powell to step down immediately, adding that he should see through the end of his term in May if he wants. The Australian dollar was steady at $0.6557 , while New Zealand's kiwi dollar traded at $0.60065 , up about 0.1% .
