Oil prices dipped slightly during Wednesday trading, halting a three-day losing streak, as global markets reacted to a newly announced US-Japan trade agreement and weighed ongoing uncertainties in other major trade talks.
As of 09:07 GMT,
- Brent crude was down 12 cents or 0.2% at $68.47 per barrel.
- West Texas Intermediate (WTI) crude fell 14 cents or 0.2% to $65.17 per barrel.
Background and Market Sentiment
Both global oil benchmarks had declined by about 1% on Tuesday, following the European Union’s announcement that it may pursue retaliatory measures against US tariffs, dampening hopes for a resolution ahead of the August 1 deadline.
However, sentiment was lifted slightly after US President Donald Trump revealed that the United States had reached a trade deal with Japan, which includes a 15% tariff on US imports from Japan.
“The recent price drop over the past three sessions appears to have halted, but I don’t expect a major upward push from the US-Japan deal, as delays and roadblocks in talks with the EU and China will continue to weigh on sentiment,”
— Vandana Hari, Founder, Vanda Insights
Global Trade Talks Continue
In a parallel development, China’s Ministry of Commerce confirmed that the Chinese commerce minister and the EU trade commissioner had held “frank and in-depth” talks on trade cooperation, signaling possible movement ahead of an upcoming EU-China summit.
Oil Inventory Update
Market sources citing American Petroleum Institute (API) data said:
- US crude oil and gasoline inventories fell last week.
- Distillate inventories rose by 3.48 million barrels.
“This development will provide some support to the distillates market, which is increasingly facing tightness,”
— ING Analysts
“The crude inventory draw could lend some price support, even with expectations of a surplus later this year.”
Adding a bullish undertone, the US Energy Secretary stated that Washington may consider new sanctions on Russian oil, intensifying efforts to end the war in Ukraine.
The EU, meanwhile, approved its 18th sanctions package against Russia last Friday, which includes a lowered price cap on Russian crude oil.
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