Oil prices climbed in early European trading on Monday following a trade agreement between the United States and the European Union, easing fears of escalating transatlantic trade tensions ahead of a key tariff deadline.
Brent (BZ=F) crude futures gained 0.9% to trade at $69.04 per barrel, at the time of writing, while West Texas Intermediate (CL=F) futures climbed by 0.8% to $65.70 a barrel.
The modest gains came after Washington and Brussels struck a last-minute trade pact on Sunday, ahead of US president Donald Trump’s 1 August deadline for a new round of tariffs on EU imports. Under the agreement, most European goods will now face a 15% import tariff, half the rate initially proposed by the US administration.
Read more: FTSE 100 LIVE: Markets higher as EU agrees 15% tariff in US trade deal
The agreement, which averts a broader trade conflict between two economies that together account for nearly a third of global trade, helped support sentiment in financial markets, including oil.
“With the risk of a prolonged trade war and the importance of the August tariff deadlines being steadily defused, markets have responded positively,” IG markets analyst Tony Sycamore said in a note.
The deal also raised hopes of further de-escalation in global trade tensions, including a potential extension of the current tariff pause between Washington and Beijing.
However, gains in crude prices were tempered by investor caution ahead of a meeting of the Opec+ alliance on Monday. The group is expected to review the pace at which it is easing supply curbs implemented during the pandemic-induced downturn.
Gold prices were muted on Monday morning, as the trade agreement between the US and the EU boosted investor confidence and dampened demand for the traditional safe haven asset.
Gold futures were flat at $3,335.90 per ounce, at the time of writing, while spot gold advanced 0.1% to $3,341.97 per ounce.
The precious metal lost some of its appeal as markets digested news of a new transatlantic trade deal that helped ease tensions between Washington and Brussels. The agreement has lifted broader market sentiment, weighing on gold, which tends to perform best during periods of heightened uncertainty.
Stocks: Create your watchlist and portfolio
Analysts noted that progress toward a trade truce lowered uncertainty, drawing funds into equities and reducing bullion’s attraction.
Gold’s gains were further capped by investor caution ahead of a closely watched US Federal Reserve policy decision due later this week. The central bank is widely expected to leave its benchmark interest rate unchanged in the 4.25%-4.50% range when its two-day meeting concludes on Wednesday.
