Oil prices slip lower ahead of U.S. CPI, U.S.-Russia peace talks

Investing.com -- Oil prices slipped lower Tuesday, with traders assessing the extension of the tariffs truce between China and the U.S. ahead of key U.S. inflation data and the upcoming U.S.-Russia peace talks.

At 07:35 ET (11:35 GMT), Brent oil futures for October fell 0.4% to $66.34 a barrel and West Texas Intermediate crude futures fell 0.6% to $63.61 a barrel. 

Traders digest U.S.-China trade truce extension

Oil clocked early gains as the U.S. and China agreed to extend their May-June trade truce by another 90 days, entailing lower tariff levels between the two. 

A temporary trade agreement between Washington and Beijing was set to expire today, which could have seen both countries raise their respective tariffs back to levels above 100% seen earlier this year.

But both parties expressed optimism over trade ties between the two countries, raising confidence that the two will reach a more permanent trade deal. 

Still, Trump’s tariffs remained a point of contention for oil markets, as the levies became effective from last week. Markets were watching for whether the duties will disrupt global economic activity and hurt oil demand. 

Inflation release prompts caution

However, the early gains have dissipated ahead of U.S. inflation data later in the session, which could shape the Fed’s rate path. Interest rate cuts typically boost economic activity and oil demand.

Fresh signs of softness in the U.S. labor market have boosted expectations for a Federal Reserve rate cut in September, but elevated inflation levels have made some Federal Reserve members wary about cutting rates, especially given the uncertainty surrounding the inflationary impact of the Trump administration’s tariff policies.

U.S.-Russia talks over Ukraine in focus 

Also of interest will be the meeting between U.S. President Donald Trump and his Russian counterpart Vladimir Putin in Alaska on Friday to discuss an end to the war in Ukraine. 

The meeting comes after Trump threatened even tougher restrictions on Russia’s oil industry, threatening steep trade tariffs on India and China, which are Moscow’s biggest oil buyers.

Trump outlined tariffs of as high as 50% against India, and threatened China with a similar move. Global oil supplies could be crimped by India and China seeking alternative sources, although concerns over such a scenario eased ahead of Friday’s meeting. 

Ukraine has signaled that it will reject any deal that requires it to give up territory to Russia. But a deescalation in the conflict stands to free up Russia’s oil shipments, in turn increasing global supplies. 

Ambar Warrick contributed to this article