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Tariffs

Oil Prices Steady as US and China Extend Trade War Pause

Strategic Insights

— 1 min read

The United States and China have extended their pause on higher tariffs, easing concerns about the impact of their trade war on oil consumption. As a result, oil prices have remained relatively stable, with Brent crude futures trading at $66.61 a barrel and US West Texas Intermediate crude futures at $63.86. The pause on tariffs has raised hopes that an agreement can be reached between the two countries, potentially avert a trade embargo and boost oil demand. Additionally, the labour market in the US has shown signs of softness, which has boosted expectations for a Federal Reserve rate cut in September.

Key Takeaways:

  • Oil prices have remained relatively stable following the extension of the US-China trade war pause, with Brent crude futures trading at $66.61 a barrel and US West Texas Intermediate crude futures at $63.86.
  • The pause on tariffs has raised hopes that an agreement can be reached between the US and China, potentially averting a trade embargo and boosting oil demand.
  • Fresh signs of softness in the US labour market have boosted expectations for a Federal Reserve rate cut in September, which could increase oil demand.
  • The US inflation data released later in the day could shape the Fed's rate path, and interest rate cuts typically boost economic activity and oil demand.
  • A meeting between US President Donald Trump and Russian President Vladimir Putin on Friday could potentially weigh on the oil market, as the meeting aims to discuss an end to the war in Ukraine.

Statistics:

  • Brent crude futures lost 2 cents to $66.61 a barrel as of 0904 GMT.
  • US West Texas Intermediate crude futures eased 10 cents, or 0.2 per cent, to $63.86.
  • The US and China have extended their pause on higher tariffs, with US President Trump setting a deadline of November 10 for a potential trade deal to be reached.
  • Fresh signs of softness in the US labour market have boosted expectations for a Federal Reserve rate cut in September.
  • US inflation data is expected to be released later in the day, which could shape the Fed's rate path.

Sources:

  • Reuters, "Oil prices steady as US and China extend trade war pause"
  • Commerzbank, "Note on US-China trade deal and oil market implications"
  • Cyprus Mail, "Oil prices steady as US and China extend trade war pause"
  • Phillip Nova, "Senior Market Analyst at brokerage Phillip Nova"

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