Oil prices fell on Tuesday amid uncertainty about the global economic outlook after the US-EU trade deal, and in anticipation of the US Federal Reserve's interest rate decision, UNN reports with reference to Reuters.
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Brent crude futures fell 6 cents, or 0.1%, to $69.98 a barrel at 04:25 GMT (07:25 Kyiv time). West Texas Intermediate crude futures traded at $66.60, down 11 cents, or 0.2%.
Both contracts closed more than 2% higher in the previous session, and on Monday, Brent crude reached its highest level since July 18.
Brent oil price reached a weekly high25.07.25, 10:23 • [views_3820]
The US-EU trade agreement, which includes a 15% import duty on most EU goods, avoided a full-scale trade war between the two major allies, which could have affected almost a third of global trade and worsened the outlook for fuel demand.
The agreement also provides for the EU to purchase $750 billion worth of US energy in the coming years. Analysts believe that the EU has virtually no chance of fulfilling this plan, while European companies must invest $600 billion in the US during President Donald Trump's second term.
While the conclusion of the US-EU trade agreement was a relief for global markets amid increased uncertainty, the timing and milestones of the investments are still unclear, ANZ analysts noted in their note.
"We believe that the 15% rate will create obstacles for the eurozone's growth prospects, but is unlikely to push the economy into recession," they said.
Meanwhile, a meeting of high-ranking US and Chinese economic officials took place in Stockholm on Monday, lasting more than five hours, to resolve long-standing economic disputes that are at the heart of the trade war between the world's two leading economies. Talks are expected to resume on Tuesday.
Oil market participants are also awaiting the meeting of the US Federal Reserve's Open Market Committee on July 29-30. The Fed is expected to keep rates at the same level, but may signal a "dovish" bias amid signs of slowing inflation, said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova.
"In the short term, the momentum favors growth, but the market is vulnerable to volatility caused by unexpected central bank decisions or a breakdown in trade negotiations," Sachdeva said.
"The likelihood of an economic slowdown and a potential Fed rate cut remains uncertain, limiting the upside potential for oil prices," she said.
Meanwhile, on Monday, Trump set a new deadline - "10 or 12 days" - for Russia to make progress in ending the war in Ukraine, otherwise it faces sanctions. Trump threatened sanctions against both Russia and buyers of its export products if no progress is made.