Noor Trends News, Technical Analysis, Educational Tools and Recommendations
Oil prices were relatively stable on Wednesday following three consecutive days of losses, with a boost from a U.S.-Japan trade agreement that raised optimism for global trade.
Price Movements and Market Sentiment
As of 0907 GMT, Brent crude futures were down 12 cents, or 0.2%, to $68.47 per barrel, while U.S. West Texas Intermediate (WTI) crude futures dropped 14 cents, or 0.2%, to $65.17 per barrel. Both benchmarks had lost about 1% in the previous session, as uncertainty over tariffs and countermeasures weighed on market sentiment.
U.S.-Japan Trade Deal
A significant shift in sentiment came from the announcement that the U.S. and Japan had struck a trade deal, which included a 15% tariff on U.S. imports from Japan. This move was seen as a sign of easing tensions between two major economies, which improved investor sentiment toward global trade.
The announcement provided a brief respite for oil prices, which had been under pressure due to concerns that escalating tariffs, particularly between the U.S. and the European Union, could disrupt economic activity and dampen oil demand.
EU Tariff Countermeasures
Despite the trade optimism from the U.S.-Japan deal, the European Union has expressed concerns over the rising U.S. tariffs. The EU is reportedly considering countermeasures, including potential retaliatory tariffs against U.S. goods. This heightened uncertainty ahead of the August 1 deadline for the implementation of U.S. tariffs kept the oil market cautious.
Global Trade Discussions
On the global trade front, China’s commerce minister and the European Union’s trade chief engaged in a “candid and in-depth” discussion about economic and trade cooperation. The talks come as both sides aim to address issues ahead of the upcoming China-EU summit. This dialogue is part of broader global efforts to mitigate trade disruptions and ease market tensions.
U.S. Crude and Gasoline Stocks Decline
Further supporting the oil market, U.S. crude and gasoline stocks were reported to have fallen last week, according to data from the American Petroleum Institute (API). This drop in inventories is seen as a sign of tightening market conditions. However, distillate stocks increased by 3.48 million barrels, adding some offsetting pressure on prices.
Sanctions on Russian Oil
Another factor influencing oil prices is the growing uncertainty over Russia’s oil exports. The U.S. Energy Secretary indicated on Tuesday that the U.S. could consider sanctioning Russian oil as part of efforts to end the ongoing war in Ukraine. This prospect is weighing on the market, as it could further tighten global oil supplies.
The European Union also took significant steps on Friday by agreeing to its 18th sanctions package against Russia, which includes a reduction in the price cap for Russian crude. This further complicates the situation, as countries continue to grapple with Russia’s role in global energy markets.
While the U.S.-Japan trade deal and a drop in U.S. crude stocks provided temporary support for oil prices, the market remains vulnerable to broader uncertainties, particularly concerning the escalating trade disputes and the potential impact of sanctions on Russian oil. As the August 1 deadline approaches, traders will continue to monitor developments closely to gauge the potential for a resolution in global trade tensions.
