DTN Oil Update

Miguel E. Andujar
DTN Refined Fuels Market Reporter

DAVENPORT, Fla. (DTN) -- Oil futures moved higher early Monday, supported by a new U.S.-EU trade framework and expectations for progress in upcoming China-U.S. discussions.

Attention turned to a fresh round of China-U.S. economic and trade talks starting Sunday in Sweden and running through Wednesday. These follow recent understandings reached in Geneva and a framework outlined in London. With global growth still uncertain, expectations are that both countries will use existing channels to carry forward prior commitments and work toward narrowing differences through negotiation.

The United States and the European Union reached a trade agreement Sunday that sets a 15% import tariff on most EU goods -- half the previously threatened rate. The deal prevents a deeper dispute between two economies that represent nearly one-third of global trade and had raised concerns over potential pressure on fuel demand. The EU is the U.S.'s largest trading partner, with two-way trade in goods and services last year reaching nearly $2 trillion.

Increased optimism followed indications that Beijing and Washington would resume talks in Sweden, with expectations they will use existing consultation channels to address differences while China maintains it will protect its interests. The country faces an Aug. 12 deadline to reach a lasting tariff agreement with the U.S. administration.

Front-month NYMEX WTI September futures rose $1.47 to $66.63 bbl, while ICE Brent September gained $1.51 to $66.95 bbl.

NYMEX ULSD August futures added 0.30cts to $2.4094 gallon, and RBOB August futures advanced 3.68cts to $2.1340 gallon.

The U.S. dollar strengthened, with the September U.S. Dollar Index up 0.671 to 98.050.

This comes after a selloff at the end of last week influenced by reports suggesting Chevron could regain the ability to pump oil in Venezuela as Washington reverses course on its policy towards Caracas.