(Investing) – Oil prices edged higher Tuesday, bouncing off three-week lows with traders awaiting more news on potential trade deals ahead of the latest OPEC+ output meeting.
At 08:15 ET (12:15 GMT), for September rose 0.7% to $67.18 a barrel, climbing from their lowest level since June 11, just before the onset of the Israel-Iran war, while gained 0.8% to $65.62 a barrel.
U.S. tariff optimism grows
Oil markets are becoming cautiously optimistic that the Trump administration will be able to agree trade deals, as a July 9 deadline set by President Donald Trump to reach deals with the U.S. draws closer.
U.S. President Donald Trump on Monday lashed out against Japan and hinted at potentially ending trade talks with Tokyo, while U.S. Treasury Secretary Scott Bessent warned that countries could be slapped with high tariffs despite ongoing trade negotiations.
Markets fear that increased trade disruptions will hurt global economic growth, in turn reducing global demand for oil.
However, the U.S. and China, the two largest economies in the world, have already come to an agreement, and Canada recently rescinded a tax on the big U.S. technology firms just before the first payments were due, allowing negotiations to restart.
Additionally, the European Commission, which coordinates EU trade policy, is pushing three key points in Washington this week as both sides work towards an agreement in principle, with the final details to be ironed out later.
July OPEC+ meeting looms
Away from trade deals, the focus is squarely on the Organization of Petroleum Exporting Countries and allies (OPEC+), which is set to meet later this week, with the cartel expected to continue scaling back two years of production cuts.
Reuters reported last week that the OPEC+ will increase output by 411,000 barrels per day in August, following similar hikes in May, June, and July.
The increase would bring the OPEC+’s total supply increase for the year to 1.78 million barrels per day, although the hike is still smaller than the total number of production cuts enacted by the OPEC+ in the past two years.
“Given its strategy shift, we believe the group will continue with these large increases. This would see the full 2.2m b/d of supply brought back online by the end of the third quarter, 12 months ahead of the original schedule,” said analysts at ING, in a note.
“These larger supply increases should leave the global oil market well supplied for the remainder of the year. It’s set to return to a large surplus in the fourth quarter of this year. Clearly, recent price action suggests the market is mostly focused on this supply. The geopolitical risk premium has eroded fairly quickly following the ceasefire between Israel and Iran. Expectations for a comfortable oil balance, along with a large amount of OPEC spare production capacity, appear to be comforting the market,” ING added.
Ambar Warrick contributed to this article
