Oil prices have finally stopped falling after three days of steady decline. This pause came after a trade deal between the US and Japan gave global markets a bit of hope.
As of Wednesday morning, Brent crude was down just 2 cents at $68.57 per barrel. West Texas Intermediate (WTI) was also down 2 cents, sitting at $65.29. These are small changes, but they show that the price drop may be slowing.
This stability followed news that the US and Japan signed a trade deal. The deal includes a 15% tariff on US imports from Japan. In return, Japan promised to invest $550 billion in the US.
Markets had been nervous before this. The EU said it might fight back against US tariffs. A deal before the August 1 deadline seemed unlikely. So, the US-Japan news came at just the right time to lift some spirits.
Still, experts warn we should not get too excited. Vandana Hari, an oil analyst, said the trade deal is good news, but it won’t solve everything. Talks with the EU and China are still going badly.
The EU-China summit, which takes place on Thursday, is not expected to bring much progress. Europe and China are both dealing with rising tensions with the US. That means the oil market will likely stay shaky.
On the supply side, there is some good news. US data shows that crude oil and gasoline stockpiles fell last week. This could help support oil prices, at least for now. However, distillate stocks (used in diesel and jet fuel) went up by 3.48 million barrels.
Analysts at ING said this rise in distillates is a relief for the market. They added that low crude stocks should help prices stay stable even though more oil is expected to enter the market later this year.
Another reason oil prices could rise is new possible sanctions on Russian oil. The US energy secretary said on Tuesday that the US might target Russian oil to pressure Moscow over the war in Ukraine.
The EU already agreed on new sanctions last week. They even lowered the price cap on Russian oil. But without US support, experts say the sanctions may not be strong enough.
In short, oil prices have found a moment of peace. But it’s a shaky one. While the US-Japan deal helps, global trade tensions, especially with the EU and China, are still holding back the market.
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