Oil prices in Asian trading saw a modest uptick on Monday after falling to three-week lows last week. The rebound was sparked by the announcement of a US-European Union trade agreement that eased fears of tariff hikes and boosted optimism about future energy demand.
As of 21:47 ET (01:47 GMT), September Brent crude futures rose 0.3% to $68.66 a barrel, while West Texas Intermediate (WTI) futures also gained 0.3%, reaching $65.36 a barrel.
Friday’s lows had been driven largely by expectations of increased Venezuelan oil supplies returning to the market.
“A trade deal between the US and EU proved positive for sentiment this morning in the oil market. However, attention will likely turn to OPEC+ output policy from September,” noted analysts from ING.
US-EU Deal Spurs Market Confidence
The trade framework, unveiled on Sunday, establishes a 15% tariff on EU imports to the US—down from the originally proposed 30%—and commits the EU to purchasing $750 billion worth of US energy over multiple years. The deal also includes the EU investing $600 billion in the US economy and buying significant amounts of US military hardware.
By easing trade tensions, the agreement is expected to stimulate economic activity and international commerce, thereby supporting oil demand through greater industrial and transport energy needs.
The energy provisions in the deal also lend support to oil prices by underpinning long-term demand for US exports such as liquefied natural gas and crude oil.
With trade war fears subsiding, risk appetite improved, though investors remain watchful as President Donald Trump’s August 1 tariff deadline nears, seeking further clarity on trade policies.
OPEC+ Supply Plans and Federal Reserve Meeting Awaited
The upside in oil prices faces limits from anticipated production increases. OPEC+ is expected to modestly raise output in August, while a potential easing of US sanctions on Venezuela may allow its crude to return to markets.
An OPEC+ committee will meet Monday to evaluate current market conditions ahead of an August 3 decision on September’s production levels. Reports suggest the group plans another increase.
“We expect that OPEC+ will at least complete the full return of 2.2m b/d of the additional voluntary supply cuts by the end of September,” ING analysts said.
“This would work out to a supply hike in September of at least 280k b/d. However, there is clearly room for a more aggressive hike,” they added.
Meanwhile, the US Federal Reserve starts a two-day policy meeting Tuesday, with expectations it will keep interest rates steady. Markets will closely monitor the Fed’s tone for hints on potential rate cuts later in 2025.
This week will also bring important US economic data releases, including the June PCE inflation figures and July’s employment report, which will influence market sentiment.
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