Oil prices fall as investors focus on US-Russia talks

Oil prices fell in early European trading on Monday, as investors eyed talks between the US and Russia over the war in Ukraine, which are due to take place on Friday.

Brent crude (BZ=F) futures were down 0.8% to $64.99 per barrel at the time of writing, while West Texas Intermediate futures (CL=F) declined 1% to $63.25 a barrel.

US president Donald Trump said on Friday that he would meet Russian president Vladimir Putin in Alaska on 15 August to negotiate an end to the war in Ukraine.

The announcement of the meeting has fuelled expectations of a potential end to sanctions limiting supply of Russian oil to other markets.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “There are hopes that Trump and Putin’s meeting in Alaska later this week will help push the Ukraine conflict to a resolution, which is helping calm concerns over energy supply disruptions.

“Threats of extra tariffs on India, which buys Russian crude, pushed up oil prices, but they are in retreat amid expectations the meeting could pave the way for the lifting of sanctions on Russia.”

“As traders mull the effect on global growing in the tariff era, forecasts for lower energy demand are also acting as a drag on prices,” she said.

Gold prices dropped on Monday morning, retreating after hitting fresh highs at the end of last week, amid hopes of easing geopolitical tensions.

Gold futures (GC=F) slid 2% to $3,418.80 per ounce at the time of writing, while spot gold tumbled 1.1% to $3,359.14.

This comes after the precious metal surged to new highs on Friday, following reports of a potential US tariff on 1kg gold bars. However, an official later told Reuters that the White House planned to issue an executive order “clarifying misinformation” about tariffs on gold bars and other speciality products in the near future.

Hargreaves Lansdown's Streeter said that “there is still uncertainty hanging around the market, surrounding concerns about gold bar imports into the US being taxed. This sent the wave of turmoil through the US gold futures market on Friday, pushing prices to record levels.”

The pound was little changed against the dollar (GBPUSD=X) on Monday morning, trading at $1.3458 at the time of writing, as investors weighed geopolitical developments and looked ahead to economic data releases.

In addition to focus on talks between the US and Russia, the market spotlight is also on Tuesday's deadline for the pause in levies between the US and China, with investors watching to see if the truce on duties is extended.

Meanwhile, the US is due to release its latest consumer prices index (CPI) data on Tuesday, followed by the producer prices index (PPI) reading on Thursday.

Neil Wilson, UK investor strategist at Saxo Markets, said: “CPI is the big one for the Fed – core inflation is expected to rise 0.3% month-on-month in July, with market participants closely watching Fed policy implications.

“Core inflation picked up 0.2% last month, with the annual rate moving to 2.9%. The headline rate was 2.7% having risen from 2.4% since April and is expected to hit 2.8%.”

“The closer it gets to 3% the harder it is for the Fed,” he said. “The Cleveland Fed’s Inflation Nowcasting model CPI at 3% in July and August, too hot for the Fed to ease as the markets price.”

In the UK, employment data is set to be released on Tuesday, followed by economic growth figures on Thursday.

Thomas Watts, senior investment analyst at Aberdeen MPS, said: “With the UK labour market having proven remarkably resilient in the face of rising rates and the increase in NIC [national insurance contributions] and minimum wage, the first half of the week will give us the opportunity to check the employment landscape for weaknesses, with both the average hourly earnings index and unemployment claimant count coming out on Tuesday.

“Measuring the change in the number of people claiming unemployment related benefits during the previous month, claimant counts can be particularly useful, the figures are crucial in understanding the strength of the overall market as the figures contribute strongly to the unemployment picture.”

“Giving us a more comprehensive view of the domestic economy, later in the week the ONS [Office for National Statistics] will also release its monthly gross domestic product data, the broadest gauge of economic health,” he added. “With the UK economy having bounced back quicker and stronger than many expected, both those in the City of London and Westminster will hope there are no clouds on the horizon.”

In other currency moves, the pound was also little changed against the euro (GBPEUR=X), trading at €1.1544 at the time of writing.

In broader market movements, FTSE 100 (^FTSE) rose 0.1% on Monday morning to 9,113 points. For more details, on market movements check our live coverage here.

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