WTI falls to $65.50 as trade tensions boost demand concerns

West Texas Intermediate extended its losses for the third successive session, trading around $65.50 in the European session on Tuesday, as ongoing trade tensions boost fears about the demand outlook.

Traders adopt caution ahead of US President Trump’s August 1 tariff deadline. Market participants await further updates on the trade negotiations between major crude oil consumers, the US and the EU, this week, expecting a final trade deal to be concluded before the deadline

Trump threatened to hit the EU’s exports with 30% tariffs. In response, the European bloc is exploring a broader set of possible counter-measures against the US as prospects for an acceptable trade agreement with Washington fade, Reuters cited EU diplomats.

Reuters reported on Tuesday that Indonesian sovereign wealth fund Danantara plans to sign an $8 billion contract with US engineering firm KBR Inc. to build 17 modular refineries. The deal resulted in a reduction of the proposed US tariff rate from 32% to 19%.

Crude oil faces challenges as supply concerns ease, with major producers raising output. Joint Organisations Data Initiative showed that Saudi Arabia’s crude exports in May rose to their highest in three months.

Additionally, supply pressures have further subsided following the ceasefire on June 24 ended the conflict between Israel and Iran. Moreover, Iran announced on Monday that it will restart nuclear negotiations with European nations this week, aiming to revive the 2015 nuclear deal and prevent the reinstatement of international sanctions.

(Source: OANDA)