Oil prices edged higher on Tuesday (July 29th) amid optimism that the trade war between the United States and its major trading partners is easing and as President Donald Trump increases pressure on Russia over its war in Ukraine.

Brent crude futures rose 22 cents, or 0.3%, to $70.26 a barrel at 12:18 GMT, after touching their highest level since July 18th, while U.S. West Texas Intermediate crude was at $66.98, up 27 cents, or 0.4%.

Both contracts closed more than 2% higher in the previous session.

The trade agreement between the United States and the European Union, despite imposing 15% import tariffs on most EU goods, averted a full-blown trade war between the two key allies that would have impacted nearly a third of global trade and dimmed the outlook for fuel demand.

The agreement also calls for the European Union to purchase $750 billion worth of US energy over the next three years, something analysts say is almost impossible for the bloc to meet, while European companies will invest $600 billion in the US during President Donald Trump's second term.

Top economic officials from the US and China met in Stockholm for a second day to resolve long-running economic disputes and step back from the escalating trade war between the world's two largest economies.

Trump also set a new deadline on Monday of "10 or 12 days" for Russia to make progress in ending the war in Ukraine. Trump has threatened to sanction Russia and buyers of its exports unless progress is made.

"Oil prices strengthened after President Trump said he would shorten the deadline for Russia to reach a deal with Ukraine to end the war, raising supply concerns," ING analysts said in a note.

Market participants are also awaiting the outcome of the US Federal Open Market Committee meeting on July 29-30. The Fed is widely expected to keep interest rates unchanged but could signal a dovish tilt amid signs of easing inflation, said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova. (alg)

Source: Reuters