EU and US could reach trade deal this weekend - Reuters
Investing.com -- Oil prices edged higher Friday, adding to the previous session’s sharp gains, supported by hopes of more U.S. trade deals ahead of President Donald Trump’s nearing deadline.
At 08:00 ET (12:00 GMT), Brent Oil Futures expiring in September edged up 0.4% to $69.47 per barrel and West Texas Intermediate (WTI) crude futures also gained 0.4% to $66.32 per barrel.
Both contracts jumped more than 1% on Thursday after data showed a sharp decline in U.S. crude inventories.
Brent prices have been largely range-bound between $67 and $70 a barrel for the last month, since the sharp drop in prices in late June after de-escalation in the Iran-Israel conflict.
Markets eye more trade deals
Media reports indicated that a pivotal trade agreement between the European Union and the U.S. is nearing completion, with a 15% tariff on most EU exports to the U.S., replacing a previously threatened 30% levy scheduled to begin on August 1.
In India, Commerce Minister Piyush Goyal said he was optimistic that his country could reach an agreement with the U.S., to avert threatened tariffs of 26%.
"It looks like talks with the EU are moving in the right direction. These deals should help reduce uncertainty and also ease some of the demand concerns that have been lingering in the oil market," ING analysts said in a note.
This comes after Trump on Wednesday announced a trade deal between the U.S. and Japan, slashing tariff rates to 15% on all imported Japanese goods, from a previously proposed 25%.
It bolstered the sentiment that other nations could also reach favorable agreements before the deadline.
Easing trade tensions boosts economic activity and cross-border commerce, which in turn drives up oil demand through increased transportation and industrial energy use.
Investors weigh Russia gasoline cuts, Venezuela supply
Adding to the market confidence was a Reuters report that said on Thursday that Russia is expected to introduce a tighter gasoline export ban in the coming days, including for fuel producers, to tackle rising prices.
At present, only a limited share of gasoline exports by resellers is restricted, while oil companies remain free to export the fuel.
On the flip side, Reuters also reported that the U.S. is set to allow limited oil operations in Venezuela, starting with Chevron Corp (NYSE:CVX).
In February, Trump announced the revocation of several energy licenses in Venezuela, including Chevron’s, and set a deadline of late May to cease all related transactions.
"This should see Venezuelan oil exports increase by a little more than 200k b/d, welcome news to U.S. refiners that will ease some tightness in the heavier crude market," ING analysts said.
Ayushman Ojha contributed to this article