Oil creeps up amid expectations of a US-EU deal
26 May 08:05
Oil prices showed slight gains during morning trading in Asia on Monday after US President Donald Trump announced an extension of trade talks with the European Union. This decision helped to ease concerns about the possible introduction of US tariffs on EU goods, which could negatively affect the global economy and fuel demand. This was reported by "Komersant Ukrainian" with reference to Reuters.
Dynamics of prices for oil futures
According to OilPrice.com, as of 07:52 Kyiv time, Brent crude oil futures rose by 25 cents, or 0.39%, to reach $65.03 per barrel. At the same time, U.S. West Texas Intermediate (WTI) rose by 23 cents, or 0.37%, to $61.76 per barrel.
“We are seeing a nice rise in crude oil prices and US stock futures this morning after US President Trump extended the deadline for negotiations,”
– commented Tony Sycamore, market analyst at IG.
Details of the trade talks
Trump announced his agreement to extend the deadline for trade talks with the European Union until July 9. This decision was made after the appeal of the European Commission President Ursula von der Leyen, who noted that the bloc needed more time to reach an agreement.
According to analyst Sikamore, news about trade and duties, as well as current fiscal issues, will be the main unpredictable factors for market sentiment and crude oil prices this week.
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Previous market dynamics
Brent and WTI crude oil continued to rise moderately after trading on Friday ended up 0.5% higher. This growth was driven by limited progress in the negotiations between the US and Iran on the nuclear deal, which eased concerns about the possible return of Iranian oil to world markets. Prices were also affected by the fact that American buyers were closing positions ahead of the three-day Memorial Day weekend.
Factors supporting prices
Quotes also received support from the data of the energy service company Baker Hughes, which showed that American companies, under pressure from low oil prices, reduced the number of operating oil rigs by 8 units to 465 last week. This is the lowest figure since November 2021.
Restraining factors
At the same time, the price increase was limited by expectations that the Organization of the Petroleum Exporting Countries and its allies (known as OPEC) may decide to increase production by another 411 thousand barrels per day in July during their next meeting.
Reuters reported this month that the group could reverse the rest of its voluntary 2.2 million barrels per day production cuts by the end of October. This comes after the organization has already raised its production targets by about 1 million barrels per day for April, May and June.
Conclusions
The current situation on the oil market demonstrates the complex interaction of geopolitical factors, trade policy, and supply and demand fundamentals. The continuation of trade negotiations between the US and the EU has created short-term support for oil prices, but the long-term dynamics will depend on OPEC’s decisions and the overall state of the global economy.
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