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VT 
West Texas Intermediate (WTI) futures extended gains for the fourth consecutive session, reaching nearly $62.00. The boost in oil demand outlook follows a 90-day US-China agreement to reduce tariffs substantially by 115%.
This agreement includes lowering import duties to 10% and 30% for the US and China, respectively, aiming to ease trade tensions. This eased trade war concerns and improved the global economic outlook, contributing to the rise in oil prices.
Market Reaction To Us China Agreement
However, the US-China truce reduced expectations for interest rate cuts by the Federal Reserve during the July meeting, possibly limiting increases in oil prices. The CME FedWatch Tool indicated the likelihood of a rate cut has decreased to 38.6% from 78% a week prior.
Upcoming meetings between Russian and Ukrainian leaders could further influence oil prices, depending on the outcomes. Discussions planned in Turkey could impact global oil dynamics.
WTI Oil, sourced in the US and distributed from Cushing, is a benchmark in the oil market, characterised by its low gravity and sulphur content. Supply-demand dynamics, geopolitical events, and decisions by OPEC members are key factors in determining WTI Oil pricing.
What the article indicates is that oil, specifically WTI futures, is riding a wave of renewed optimism—the type sparked not by internal supply constraints, but by macroeconomic sentiment shifts. The recent uptick to nearly $62.00 per barrel isn’t random. It’s closely tied to a temporary thawing in US-China trade tensions, which has improved risk appetite and therefore demand projections.
Impacts Of Trade Tensions And Geopolitical Events
The reduction of tariffs by both parties—down to 10% for the US and 30% for China—acts as a temporary pressure release valve. It doesn’t eliminate tensions entirely, but markets tend to react well to even partial forward movement. From our standpoint, this is less about the numbers and more about what they imply: a tacit admission from both governments that the current impasse was costing both sides more than it was worth. In commodity markets, that sort of signal carries weight, as it can hint at better trade flow for the near term.
But this optimism has ripple effects, some of which aren’t altogether supportive for prices longer term. Lower trade tensions typically reduce the impetus for stimulus. For central banks, and more specifically the Federal Reserve, less market anxiety means less justification to cut rates. We’ve already seen this manifest through CME FedWatch figures. A week ago, a July rate cut from the Fed felt almost like a certainty. Now, less than 40% of market participants see it happening.
The implications of this are multifaceted. While stronger global trade outlooks encourage higher demand for energy, which benefits WTI pricing, reduced likelihood of rate cuts means tighter liquidity. For those of us dealing in derivatives, movement in bond yields and currency strength can quickly offset physical demand forecasts. Simply put, this could put a ceiling on further oil gains in the short term.
There’s another layer here—geopolitical. Planned discussions between Russian and Ukrainian delegates, set in Turkey, should not be ignored. Supply disruption fears in Eastern Europe are always priced in to some degree, but any movement in those talks—either towards resolution or escalation—can force futures traders to reposition quickly. For now, the market has taken a “wait-and-see” stance, but we’re watching it closely. A positive development could suppress any risk premium embedded into current prices.
From a supply structure perspective, WTI remains a key marker due to its quality and consistency. Originating in the US and routed through Cushing, it serves as a reference point for many contracts globally. Unlike Brent or other regional blends, WTI is closely influenced not only by global politics, but also by domestic production trends, pipeline logistics, and inventory changes as reported in EIA data. These remain top inputs in the models we use for near-term pricing.
Trading the curve requires attention to the balance between physical fundamentals and sentiment-driven flows. At present, flat price movements are being fuelled less by refinery demand or inventory draws, and more by the softening of macro risk. That cannot be extrapolated indefinitely. We recommend a tighter focus on central bank language in the US, European macro indicators, and real-time tracking of volumes in Asian imports—which have picked up slightly but not uniformly.
Expect more data to challenge this optimism soon. Keep models responsive and hedges fluid.
