Oil prices were higher in early trading today as progress in U.S. trade deals dampened fears of a global economic meltdown.
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Total Fallout
Brent crude futures, the international standard, gained 0.6% to trade at $68.90 per barrel in early trading, while West Texas Intermediate futures climbed by the same margin to $65.67 a barrel.
However, the move upwards did little to boost oil stocks with BP (BP) down 0.4%, Chevron (CVX) off 0.3% and Shell (SHEL) down 0.4% in pre-market trading.
Weighing on investor sentiment were Q2 results from TotalEnergies (TTE) which reported a drop in profits and revenues and issued a warning over a glut in oil supply. This, it said, was down to the unwinding of production cuts by cartel OPEC+ and weak demand from a global economic slowdown.
The uptick in prices today may be the beginning of better news for the sector. Sentiment has been helped by recent U.S. trade deals with Japan and Indonesia as well as stronger optimism on a potential deal with the EU.
That comes after a volatile period for oil prices, as can be seen with U.S. Crude below, because of tariff fears.
Price Flow
“Buying was driven by optimism that progress in tariff negotiations with the U.S. would help avoid a worst-case scenario,” said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, a unit of Nissan Securities. “Still, uncertainty over U.S.-China trade talks and peace negotiations between Ukraine and Russia is limiting further gains.”
He believes that the WTI price will likely remain range-bound between $60 and $70.
That’s a common view among analysts who have previously stated that a ‘geopolitical premium’ on the oil price is likely to keep the Brent price above $65. The premium refers to the continued uncertainty over conflicts in Ukraine and the Middle East.
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