Crude oil prices edged lower on Tuesday despite encouraging developments in trade talks between the United States and China, as traders remained cautious about the outcome.
Brent crude was trading at $66.82 per barrel, while West Texas Intermediate (WTI) hovered around $65 per barrel. This came after U.S. and Chinese officials reported progress in talks aimed at easing export restrictions and developing a long-term resolution to their trade dispute.
U.S. Commerce Secretary Howard Lutnick confirmed a tentative agreement, saying, “We have reached a framework to implement the Geneva consensus.” He noted that the framework still requires approval from both President Joe Biden and President Xi Jinping before it can be put into action.
Analysts suggest that the lack of formal approval may have tempered optimism in the oil market, despite prices holding higher than last week’s levels.
“The deal removes some downside risks, especially for China’s economy, and offers stability for the U.S.,” said Tony Sycamore, an analyst with IG. “Both factors should support crude demand and prices.”
In Europe, the European Union announced it is weighing new sanctions against Russia. This includes a potential ban on the dormant Nord Stream pipeline and a further price cap on Russian crude oil. The measures would form part of the bloc’s 18th sanctions package against Moscow.
However, broader economic concerns could limit oil demand growth. The World Bank revised its global growth forecast downward from 2.7% to 2.3%, warning that 2024 may mark the slowest year for the global economy since the 2008 financial crisis. This gloomy outlook adds to the bearish pressure on crude markets.
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