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Oil prices pause slide on US-Japan trade deal

Oil prices pause slide on US-Japan trade deal

The oil prices rose in Asian trade Wednesday, after three straight sessions of declines. A U.S.-Japan trade agreement signaled progress on tariffs. However, gains were limited by the fading hope for a breakthrough during an EU and China summit.

Brent crude futures were up 21 cents or 0.31% to $68.80 per barrel at 0351 GMT. U.S. West Texas Intermediate Crude Futures rose 17 cents or 0.26% to $65.48 a barrel.

The benchmarks fell about 1% the previous session, after the EU announced it was considering countermeasures to U.S. Tariffs. Hopes for a deal before the August 1 deadline faded.

On Tuesday, President Donald Trump announced that the U.S. had reached a deal with Japan that included a 15% tariff for U.S. imports coming from Japan. He said that Japan agreed to invest $550 billion dollars in the U.S.

The industry is not expecting much from the EU-China Summit on Thursday, which will be a test of the EU's resolve and unity amid rising trade tensions between Beijing and Washington.

The price decline of the last three sessions has abated, but I do not expect much of a boost from the news of a U.S. Japan trade deal. As the delays and hurdles reported in the talks with China and the EU will continue to drag on sentiment," Vandana Hari said.

The Chinese Ministry of Commerce reported that the European Union trade chief and China's minister for commerce had an "in-depth and candid" discussion about economic and trade issues as well as the other challenges facing both sides ahead of the Summit.

Separately U.S. crude oil and gasoline inventories fell last week. Market sources cited American Petroleum Institute data on Tuesday. They added that distillate stocks increased by 3.48 millions barrels.

The ING analysts said in a report that the low crude inventory will help support prices, even though a large surplus will be expected later this year.

The U.S. Energy Secretary said that sanctions against Russian oil could be considered to end the conflict in Ukraine, which is another positive sign for the crude markets.

The EU agreed on Friday to its 18th package of sanctions against Russia. This included a lower price cap for Russian crude. Analysts said that the absence of U.S. involvement would hamper the effectiveness of this package. (Reporting from Mohi Nrayan in New Delhi; additional reporting from Colleen H. Howe in Beijing. Editing by Muralikumar Anantharaman, Jamie Freed and Muralikumar Anantharaman)

(source: Reuters)