Brent declines as Trump-Putin meeting approaches

The front-month ICE Brent contract has lost by $0.54/bbl on the day, to trade at $66.00/bbl at 09.00 GMT.

IMAGE: Oil pumpjacks. Getty Images

Upward pressure:

The latest economic data coming out of the US has provided some upward thrust to Brent’s price today.

The US inflation rate, based on the Consumer Price Index for all urban consumers (CPI-U), increased by 0.2% in July, after rising by 0.3% in June. On an annual basis, the US CPI advanced 2.7% last month.

Market analysts say the CPI figures have strengthened expectations that the US Federal Reserve (Fed) will move to cut interest rates at its September meeting.

“US consumer price index data yesterday [is] buttressing the view that the Federal Reserve will likely cut interest rates at its September meeting,” remarked two analysts from ING Bank.

A rate cut in the US could spur demand growth and make commodities such as oil cheaper for non-dollar holders.

Downward pressure:

Brent’s price has continued to move lower, ahead of Friday’s highly anticipated meeting between US President Donald Trump and Russian counterpart Vladimir Putin.

“The outcome [of Friday’s meeting] could remove some of the sanction risk hanging over the market,” ING Bank’s analysts note.

The two leaders are set to meet in Alaska to discuss potential pathways toward a peace deal in the Russia-Ukraine conflict, now entering its third year.

“Market consensus veered towards expectations that Friday’s summit between US President Donald Trump and Russian President Vladimir Putin will yield a Ukraine ceasefire,” according to VANDA Insights’ founder Vandana Hair.

By Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online