[NEW YORK] Oil prices were little changed on Wednesday as investors assessed trade developments between the European Union and the US after President Donald Trump reached a tariff deal with Japan.
Brent crude futures settled 8 cents, or 0.12 per cent, lower at US$68.51 a barrel, while US West Texas Intermediate crude futures were down 6 cents, or 0.09 per cent, at US$65.25 per barrel.
On Wednesday, EU officials said they were heading towards a trade deal with Washington that would result in a broad 15 per cent tariff on EU goods imported into the US, avoiding a harsher 30 per cent levy slated to be implemented from Aug 1.
Just hours earlier, Trump said the US and Japan had struck a trade deal that lowers tariffs on auto imports and spares Tokyo from punishing new levies on other goods in exchange for a US$550 billion package of US-bound investment and loans.
“The trade deal with Japan might be a template for trade deals with other countries,” said Andrew Lipow, president of Lipow Oil Associates. “On the other hand, the market is still concerned about the US coming to an agreement with the European Union and China.”
The European Commission planned to submit counter-tariffs on 93 billion euros (S$139.1 billion) of US goods for approval to EU members. A vote is expected on Thursday, though no measures would be imposed until Aug 7.
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Both benchmarks lost about 1 per cent on Tuesday after the EU said it was considering countermeasures against US tariffs.
“The slide (in prices) of the past three sessions appears to have abated, but I don’t expect much of an upward impetus from news of the US-Japan trade deal as the hurdles and delays being reported in talks with the EU and China will remain a drag on sentiment,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
On the supply side, US Energy Information Administration data showed US crude inventories fell last week by 3.2 million barrels to 419 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.6 million-barrel draw.
“That’s a bullish swing,” said Bob Yawger, director of energy futures at Mizuho. “It was largely a function of import-export dynamics.”
US crude exports were up by 337,000 barrels per day (bpd) to 3.86 million bpd, while net US crude imports fell last week by 740,000 barrels per day, the EIA said.
In another bullish sign for the crude market, the US energy secretary said on Tuesday that the US would consider sanctioning Russian oil to end the war in Ukraine.
The EU on Friday agreed its 18th sanctions package against Russia, lowering the price cap for Russian crude. REUTERS
