Oil prices climbed further on Tuesday, building on Monday’s gains, amid hopes of easing trade tensions between the United States and key partners, and as US President Donald Trump increased pressure on Russia over the Ukraine conflict.
Brent crude futures were up 95 cents, or 1.36%, at $70.99 a barrel at 12 p.m. EDT (1600 GMT), having touched their highest since June 23, while US West Texas Intermediate crude was at $67.70, up 99 cents, or 1.48%.
Both contracts settled more than 2% higher in the previous session.
‘Definitely Some Optimism’
The trade agreement between the United States and the European Union, while imposing a 15% import tariff on most EU goods, sidestepped a full-blown trade war between the two major allies that would have rippled across nearly a third of global trade and dimmed the outlook for fuel demand.
“There is definitely some optimism around the trade deals,” said Bob Yawger, director of energy futures at Mizuho. “It’s not perfect, especially for the Europeans, but it is better than it could have been by a long shot.”
The agreement also calls for $750 billion of EU purchases of US energy over the next three years, which analysts say the bloc has virtually no chance of meeting, while European companies are to invest $600 billion in the US over Trump’s second term.
Top economic officials from the US and China finished meetings in Stockholm that were aimed at resolving longstanding economic disputes and stepping back from an escalating trade war between the world’s two biggest economies.
New Deadline
Trump set a new deadline on Monday of “10 or 12 days” for Russia to make progress toward ending the war in Ukraine. Trump has threatened sanctions on both Russia and buyers of its exports unless progress is made.
“Oil prices rallied after President Trump said he would shorten the deadline for Russia to come to a deal with Ukraine to end the war, raising supply concerns,” ING analysts said in a note.
Market participants are also waiting to hear the outcome of the US Federal Open Market Committee meeting on Tuesday and Wednesday. The Fed is widely expected to hold rates but could signal a dovish tilt amid signs of cooling inflation, said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova.
(With inputs from Reuters)
