Singapore — Oil prices rose on Monday after the US clinched a trade deal with the EU and may extend a tariff pause with China, relieving the concern that higher levies could have hurt economic activity and limited fuel demand.
Brent crude futures inched up 20c, or 0.29%, to $68.64 a barrel by 3.36am GMT, while US West Texas Intermediate (WTI) crude stood at $65.31 a barrel, up 15c, or 0.23%.
The US-EU trade deal and a possible extension in the US-China tariff pause were supporting global financial markets and oil prices, IG markets analyst Tony Sycamore said.
“With the risk of a prolonged trade war and the importance of the August tariff deadlines being steadily defused, markets have responded positively,” he added in a note.
Sunday’s US-EU framework trade pact sets an import tariff of 15% on most EU goods, half the threatened rate. The deal averted a bigger trade war between two allies that account for almost one-third of global trade and could crimp fuel demand.
Also set for Monday is a meeting in Stockholm of senior US and Chinese negotiators aiming to extend before an August 12 deadline a truce holding off sharply higher tariffs.
Oil prices settled on Friday at their lowest in three weeks weighed down by global trade concerns and the expectation of more oil supply from Venezuela.
State-run oil company PDVSA was readying to resume work at its joint ventures under terms similar to Biden-era licences, once US President Donald Trump reinstated authorisations for its partners to operate and export oil under swaps, company sources said.
Though prices were up slightly on Monday, gains were limited by the prospect of Opec+ further easing supply curbs.
A market monitoring panel of oil cartel Opec and their allies is set to meet at 12pm GMT on Monday.
It was unlikely to recommend altering existing plans by eight members to raise oil output by 548,000 barrels a day (bbl/day) in August, four Opec+ delegates said last week, though another source said it was too early to say.
ING expects Opec+ will at least complete the full return of 2.2-million barrels a day of the additional voluntary supply cuts by the end of September.
That would work out to a supply hike in September of at least 280,000bbl/day. However, there is clearly room for a more aggressive hike.
The producer group is keen to recover market share while summer demand is helping to absorb the extra barrels.
JPMorgan analysts said global oil demand rose by 600,000bbl/day in July on year, while global oil stocks rose 1.6-million barrels a day.
In the Middle East, Yemen’s Houthis said on Sunday they would target ships of companies that did business with Israeli ports, regardless of nationality, in what they called a fourth phase of military operations against Israel over the Gaza conflict.
Reuters
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