Oil prices held steady on Wednesday, following three consecutive days of declines, as a tariff agreement between the U.S. and Japan helped lift global trade sentiment.
As of 06:54 GMT, Brent crude futures edged down by 2 cents (0.03%) to $68.57 a barrel, while U.S. West Texas Intermediate (WTI) crude also dipped 2 cents to $65.29 per barrel.
Both benchmarks had fallen around 1% in the previous session, after the European Union hinted at possible retaliatory measures in response to U.S. tariffs, dampening hopes for a breakthrough in trade talks before the August 1 deadline.
President Donald Trump announced Tuesday that the U.S. and Japan had reached a deal that includes a 15% tariff on imports from Japan, down from a proposed 25%, and a $550 billion investment commitment from Japan in the U.S. economy.
However, expectations for progress at Thursday’s EU-China summit remain low, as divisions within the EU and ongoing tensions with Beijing and Washington weigh on sentiment.
“The recent price drop seems to have paused, but the U.S.-Japan deal isn’t likely to spark a major rebound,” said Vandana Hari, founder of Vanda Insights. “Uncertainty in talks with the EU and China will continue to dampen market mood.”
Ahead of the summit, China’s Ministry of Commerce said that Chinese and EU trade leaders had held a “frank and in-depth” dialogue on bilateral trade and other pressing issues.
In the U.S., crude oil and gasoline inventories declined last week, according to American Petroleum Institute data, while distillate stocks rose by 3.48 million barrels, sources said.
“This uptick in distillate stocks may ease tightness in the middle distillate market,” ING analysts wrote, noting that while crude inventories remain low, any future market surplus later in the year could cap price gains.
In a potentially bullish development for oil markets, U.S. Energy Secretary Jennifer Granholm said Tuesday that Washington is considering sanctions on Russian oil in an effort to pressure Moscow over the war in Ukraine.
Last Friday, the EU adopted its 18th sanctions package against Russia, which includes a lower price cap on Russian crude. Still, analysts warned that without U.S. cooperation, the package’s impact would be limited.
