Oil prices fall as key trade talks falter ahead of tariff deadline

[NEW YORK] Oil prices fell on Tuesday for a third consecutive session, as hopes faded for a trade deal between the US and Europe, feeding fears of an economic slowdown in the world’s largest oil markets.

Brent crude futures were down 82 cents, or 1.2 per cent, to US$68.39 a barrel by 1.59 pm EDT. US West Texas Intermediate crude futures for August delivery, set to expire on Tuesday, fell US$1.05, or 1.6 per cent, to US$66.15 per barrel.

The more active September WTI contract was down 87 cents, or 1.3 per cent, to US$65.08 a barrel.

The European Union was exploring a broader set of possible counter-measures against the US as prospects faded for an acceptable trade agreement with Washington, EU diplomats told Reuters.

US President Donald Trump has set an Aug 1 deadline for countries to secure trade deals or face steep tariffs. He had threatened a 30 per cent tariff on EU imports if no deal was reached.

“It appears that tariff factor is becoming a greater focus ahead of the US deadline,” analysts at energy advisory firm Ritterbusch and Associates said in a note.

Prospects of an interim trade deal between the US and India before that deadline have also dimmed, two Indian government sources told Reuters.

Diesel was the top decliner across the energy complex, reflecting economic concerns. The industrial fuel, used predominantly in manufacturing, construction and heavy transport, had been the top performer in oil markets over recent weeks due to tight global supplies.

US ultra-low sulfur diesel futures slid nearly 3 per cent on Tuesday to US$102.50 a barrel.

Still, crude price declines may be limited by the possibility that the US could scale back the tariffs it has threatened or even delay them, Ritterbusch and Associates said.

Meanwhile, a Reuters poll of analysts showed US crude oil inventories likely fell by about 600,000 barrels in the week to July 18. REUTERS