Oil prices were little changed on Wednesday (July 23rd) as investors assessed trade developments between the European Union and the US after President Donald Trump reached a tariff deal, opening a new chapter with Japan.

Brent crude futures closed 8 cents, or 0.12%, lower at $68.51 a barrel, while U.S. West Texas Intermediate crude fell 6 cents, or 0.09%, to $65.25 a barrel.

On Wednesday, European Union officials said they were moving toward a trade deal with Washington that would result in a broad 15% tariff on EU goods imported into the US, avoiding the higher 30% tariffs scheduled to take effect on August 1st.

Just hours earlier, Trump said the US and Japan had reached a trade deal that lowers tariffs on auto imports and exempts Tokyo from imposing new tariffs on other goods in exchange for a $550 billion investment and loan package to the US. "The trade deal with Japan may set a precedent for trade deals with other countries," said Andrew Lipow, president of Lipow Oil Associates. "On the other hand, the market remains concerned about whether the US will reach a deal with the European Union and China."

The European Commission plans to submit retaliatory tariffs on 93 billion euros ($109 billion) worth of US goods for approval by EU members. A vote is expected on Thursday, although no measures will take effect until August 7.

Both benchmarks fell about 1% on Tuesday after the European Union said it was considering retaliatory measures against the US tariffs. "The decline (in prices) of the last three sessions seems to have eased, but I don't expect much upside from the US-Japan trade deal news as reported obstacles and delays in talks with the EU and China will continue to weigh on sentiment," said Vandana Hari, founder of oil market analysis provider Vanda Insights.

On the supply side, US Energy Information Administration data showed US crude oil inventories fell last week by 3.2 million barrels to 419 million barrels, compared with analysts' expectations in a Reuters poll for a 1.6 million barrel decline. "That's a bullish move," said Bob Yawger, director of energy futures at Mizuho. "It's largely a function of import-export dynamics."

US crude oil exports rose by 337,000 barrels per day (bpd) to 3.86 million bpd, while net US crude oil imports fell by 740,000 bpd last week, according to the EIA. In another positive sign for the crude oil market, the US Energy Secretary said on Tuesday that the US would consider sanctions on Russian oil to end the war in Ukraine. (alg)

Source: Reuters