West Texas Intermediate (WTI) crude oil prices took a breather on Tuesday, halting a three-day winning streak and trading around $61.40 per barrel during the Asian session. Despite the pullback, oil prices remain supported by growing optimism following recent developments in the US-China trade negotiations.
US-China Trade Deal Boosts Market Sentiment
Over the weekend, the United States and China reached a preliminary deal in Switzerland to significantly reduce tariffs, signaling potential relief for global markets. Under the agreement, the US will lower tariffs on Chinese goods from 145% to 30%, while China will reduce tariffs on US imports from 125% to 10%. This breakthrough has been widely hailed as a step toward de-escalating trade tensions and fostering economic stability.
Ongoing Supply Concerns and Geopolitical Risks
Despite the positive trade news, downside risks for oil prices persist. Market concerns about oversupply continue to weigh on sentiment, particularly with OPEC+ signaling a possible increase in oil production for May and June. Additionally, President Donald Trump’s remarks about progress in nuclear talks with Iran have raised speculation that US sanctions on Iranian oil exports could be lifted, further pressuring the market.
Geopolitical developments are also adding uncertainty. Ukrainian President Volodymyr Zelensky has invited President Trump to participate in potential peace talks in Turkey this week, as Kyiv intensifies efforts to secure a cease-fire in its ongoing conflict with Russia.
Regulatory Changes and Inflation Data Awaited
In the US, the Department of Energy announced plans to eliminate or revise over 40 regulations as part of President Trump’s broader initiative to roll back federal oversight. The move, which is expected to save taxpayers $11 billion, marks the first phase of the administration’s most extensive deregulation drive to date.
Looking ahead, market participants are eagerly awaiting the release of the US Consumer Price Index (CPI) report for April, due later today. Analysts expect a rebound in headline inflation to 0.3% month-over-month, up from a previous decline of -0.1%. Core CPI is also projected to rise to 0.3%, up from 0.1%, with year-over-year figures expected to remain unchanged.
