West Texas Intermediate (WTI) crude oil traded around $63.95 in early European hours on Monday, recovering some losses as optimism over a Federal Reserve (Fed) rate cut balanced pressure from fresh US tariffs on Indian imports. Market participants now await the American Petroleum Institute’s (API) weekly crude oil stock, due Tuesday, for further direction.
Despite July’s stronger-than-expected US Personal Consumption Expenditures (PCE) Price Index, traders continue to ramp up bets on Fed easing. According to the CME FedWatch tool, markets are pricing an 89% chance of a 25 basis point (bps) rate cut at September’s meeting, slightly higher than the 85% probability before the PCE release. Softer monetary policy expectations weigh on the US Dollar (USD), lending support to dollar-denominated oil prices.
Geopolitical risks also bolster WTI. Rising tensions between Russia and Ukraine have reignited concerns about energy supply security. Ukrainian drone strikes recently targeted Russian energy infrastructure, igniting a fire at the Kursk Nuclear Power Plant and damaging facilities at the Ust-Luga export terminal in the Baltic Sea. Meanwhile, US President Donald Trump warned of further sanctions against Russia if peace negotiations with Ukraine stall.
On the other hand, Trump’s decision to impose steep tariffs on Indian imports took effect, raising fears of slowing trade and weaker global demand. This, in turn, might undermine the black gold in the near term. The Trump administration doubled tariffs on Indian imports to 50%, citing India’s refusal to stop buying Russian crude and defence hardware.
