Oil Prices Under Pressure Ahead of Trump-Putin Talks
Oil prices are under pressure on Monday ahead of US President Donald Trump and Russian President Vladimir Putin meeting later in the week.
Trump failed to impose stricter sanctions on Russia despite his deadline for a Russia-Ukraine peace deal passing. The oil price decline was also supported by weak economic data from the US and China, fueling low demand concerns in the world’s largest oil consumers.
International benchmark Brent crude traded at $74.03 per barrel, a 1.02% drop from the closing price of $74.79 a barrel in the previous trading session on Friday.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $69.46 per barrel, down 1.01% from the previous session’s close of $70.17 per barrel. Concerns about a decline in global oil demand and a slowdown in economic growth weighed on prices.
President Trump’s deadline for Russia to strike a peace deal with Ukraine passed without stricter US sanctions imposed on Moscow.
This likely contributed to the recent weakness in crude oil prices, with Brent trading at its lowest levels since early June ING commodities strategists Warren Patterson and Ewa Manthey said in a note.
The market is focused on Trump’s meeting with President Putin on Friday — and whether any progress towards a peace deal can be made. “But with Russia demanding that Ukraine cede occupied territory to end the war, it’s difficult to see a quick solution.
“It’s unlikely that Ukraine will agree to give up its own territory. If we do see some level of de-escalation, it would remove sanction risk from the oil market. This would likely drive prices lower, given the bearish fundamentals”, ING said.
In the US, economic growth has slowed in recent months due to high inflation and interest rates. Experts now await US consumer inflation data expected on Tuesday and the Fed’s decision on interest rates due Wednesday.
Negative economic data from China, the world’s largest importer of crude oil, also raised concerns about weakening demand.
According to China’s National Bureau of Statistics, the producer price index decreased by 4.6% in April compared to the same period last year, while the consumer price index rose by 0.2%. Data showed a slower-than-expected recovery in China’s economy since the lifting of COVID-19 restrictions.
In addition, Iran’s message that it is open to an agreement with the West on its nuclear program also supported downward price movements.
Iran’s Supreme Leader, Ayatollah Ali Khamenei, said Sunday that a nuclear deal with the West is welcome as long as the country’s nuclear industry infrastructure remains intact.
Khamenei’s comments raised concerns that the balance in the oil market could be disrupted. Market players are concerned about Iranian oil flooding the market if sanctions are lifted on its crude oil exports.
The oil rig count in the US decreased by 1 this week, according to the latest data released by oilfield services company Baker Hughes on Friday.
The number of oil rigs, an indicator of short-term production in the country, fell to 539 for the week ending August 8. The number of US oil rigs dropped by 49 compared to one year ago. #Oil Prices Under Pressure Ahead of Trump-Putin Talks#
