Oil Prices Decline Despite US-EU Trade Deal and Await Fed Decision
Oil prices saw a slight decline on Tuesday, July 29, influenced by the uncertainty surrounding global economic expectations, despite the recent trade agreement between the United States and the European Union, while investors are focused on the Federal Reserve's decision on interest rates.
Data showed Brent crude futures falling by 6 cents (0.1%) to $69.98 a barrel by 04:25 GMT, while US West Texas Intermediate crude dropped 11 cents (0.2%) to $66.60 a barrel.
This decline comes after prices closed more than 2% higher in the previous session, with Brent crude reaching its highest levels since July 18 during Monday's trading.
The trade agreement between Washington and Brussels focused on imposing a 15% import duty on most European goods, successfully avoiding a full-blown trade war that could have impacted a third of global trade and reduced fuel demand expectations.
The agreement also stipulated the EU's commitment to purchase American energy products worth $750 billion in the coming years, described by analysts as "almost impossible," in addition to European investments in the US estimated at $600 billion during President Donald Trump's second term.
Despite the market satisfaction following the agreement, analysts at "ANZ Bank" pointed out that uncertainty remains regarding the timeline for implementing the investments, considering that "the 15% tariffs will pose challenges to Eurozone growth, but are unlikely to push it into a recession."
In a related context, Priyanka Sachdeva, chief market analyst at "Phillip Nova," explained that the oil markets are awaiting the Federal Open Market Committee meeting on July 29 and 30, with expectations of keeping interest rates unchanged and possibly hinting at monetary policy easing amid slowing inflation.
Sachdeva added: "Momentum is heading upwards in the short term, but the market remains susceptible to sudden fluctuations due to central bank actions or trade talk setbacks," noting that "uncertainty about economic slowdown and interest rate cuts still remains uncertain, limiting the possibilities of oil price increases."
On another front, economic officials from the US and China held talks in Stockholm that lasted for more than five hours on Monday, set to resume today.
In another development, US President Donald Trump set a new deadline for Russia ranging from 10 to 12 days to make progress in ending the war in Ukraine, threatening sanctions on Moscow and its export buyers if tangible progress is not achieved.
