Oil prices steady ahead of US-China trade talks

Commodity

Summary:

Oil prices held steady as investors awaited U.S.-China trade talks, hoping a deal would boost global growth and oil demand, despite weak Chinese data and upcoming OPEC+ production increases.

Oil prices were stable on Monday as investors awaited U.S.-China trade talks in London in the hope that a deal could boost the global economic outlook and subsequently fuel demand.

Brent crude futures gained 11 cents, or 0.2%, to $66.58 a barrel by 1312 GMT while U.S. West Texas Intermediate crude rose by 6 cents, or 0.1%, to $64.64.

Brent rose 4% last week and WTI 6.2% as the prospect of a U.S.-China trade deal boosted risk appetite for some investors.

U.S. President Trump and China's leader Xi Jinping spoke on the telephone on Thursday before U.S. and Chinese officials meet in London on Monday in an effort to calm trade tensions between the two nations.

A trade deal between the U.S. and China could support the global economic outlook and in turn boost demand for commodities including oil.

Monday's talks could dampen the impact on prices of a slew of Chinese data releases, said IG market analyst Tony Sycamore.

Chinese export growth slowed to a three-month low in May as U.S. tariffs curbed shipments while factory gate deflation deepened to its worst in two years, heaping pressure on the world's second-largest economy at home and abroad.

"Bad timing for crude oil, which was testing the top of the range and knocking on the door of a technical break above $65," Sycamore said, referring to WTI prices.

The data also showed that China's crude oil imports declined in May to the lowest daily rate in four months as state-owned and independent refiners began planned maintenance.

The prospect of a potential China-U.S. trade deal outweighed concern over the price impact from increased output by the OPEC+ group of oil producers next month.

Source: reuters

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Warren Takunda

China–U.S. Trade War

Economic

Other governments have so far taken three main approaches to dealing with Donald Trump’s trade threats. China hit back hard at the U.S. president’s tariffs and got him to back down partly. Canada also retaliated and avoided some of the pain Trump inflicted on other countries. Meanwhile, Britain cut a quick deal that favoured the United States. None of these is a model for the European Union.

The 27-member group is not China. Though its bilateral goods trade, with the United States last year was worth 70% more than between the U.S. and the People’s Republic, the EU is not an autocracy that can outpunch Trump. If it antagonises the U.S. president, he might up the stakes by pulling the rug from under Ukraine and undermining the EU’s defences. American hard power gives it what geopolitical strategists call “escalation dominance”.

The EU is not Canada either. Ottawa was able to hang tough because its people were infuriated that Trump was trying to blackmail Canada into becoming part of the United States. While anti-Trump sentiment is high in the EU, politicians who are sympathetic to him, such as Poland’s new president, can still get elected.

On the other hand, the EU is not the United Kingdom. Both are at risk from Russia’s invasion of Ukraine. But the EU trades seven times more goods with the United States than Britaindoes - so Washington has more to lose if economic relations break down. The EU Can Play It Cool With Trump’s Trade Threats_1

The EU Can Play It Cool With Trump’s Trade Threats_1

There is another way for the EU to handle Trump’s threats: play it cool. That is more or less what the bloc is doing. It involves neither escalating the conflict nor accepting a bad deal. It means being open to a good agreement if the U.S. lowers its demands, but willing to play the long game if it does not.

One reason to buy time is to help Kyiv. The longer the EU has to prepare its own support package for Ukraine, which should include getting it a lot of cash, the less the damage if Trump ultimately cuts off all U.S. aid to the country.

The president’s own vulnerabilities may also increase over time. Just look at the spectacular end of his alliance with Tesla boss Elon Musk. The fragile U.S.trade truce with China may break down causing more financial turmoil, making Trump less keen to pick a fight with the EU. If the Supreme Court stops him using emergency powers to impose tariffs, his negotiating position will be weaker. And tariffs could hurt the U.S. more than its supposed victims, by pushing up inflation and crimping growth.

A QUICK DEAL?

Trump has zig-zagged in his trade threats and actions against the EU. The current state of play is that there are 50% tariffs on U.S. imports of steel and aluminium from the bloc, a 25% tariff on cars and 10% so-called reciprocal tariffs on most other goods.

The U.S. president has threatened to jack up these reciprocal tariffs to 50% if there is no deal by July 9. He is also looking at more “sectoral tariffs”, including on pharmaceuticals and semiconductors.

While the EU has complained to the World Trade Organization (WTO), it has delayed its own retaliation. Its negotiators accept that they are unlikely to overturn the reciprocal tariffs, the Financial Times has reported.

The bloc still aims to avoid the sectoral ones. Those on cars and any on pharmaceuticals would hurt it the most. It has dangled the possibility of buying more U.S. equipment and natural gas to get a deal.

An agreement on those lines could be good for the EU. It needs to beef up its defences and eliminate its purchases of Russian gas. While it would be best to have its own arms and energy supplies, buying more from the U.S. makes sense as an interim measure. An important nuance, though, is that the EU should reserve the right to take action against the reciprocal tariffs after the WTO issues its verdict, says Ignacio Garcia Bercero, a former senior EU trade official.

Such a pact would involve quite a climbdown by Trump. True, arms and gas purchases would narrow the U.S. goods deficit with the EU, which was $236 billion, last year. But his administration has a host of other complaints including the bloc’s value-added tax and food safety standards as well the digital taxes that some of its members impose on tech giants. It is hard to see the bloc agreeing anything in those areas, says Simon Evenett, professor of geopolitics and strategy at IMD.

BACK TO WAR?

Although the U.S. side described last week’s trade talks with the EU as “very constructive”, discussions could easily break down. The question then is how the bloc would react if Trump imposed higher reciprocal tariffs.

The EU has so far imposed no countermeasures. Though it has agreed to tax 21 billion euros of U.S. imports in response to the steel and aluminium tariffs, it has delayed these until July 14 to try to get a deal. The European Commission, its executive arm, is also consulting on taxing a further 95 billion euros of U.S. imports in response to the car tariffs and the reciprocal ones. But added together, these tit-for-tat measures would be equivalent to only a third of the 379 billion euros of EU imports subject to Trump’s tariffs. The EU Can Play It Cool With Trump’s Trade Threats_2

The EU Can Play It Cool With Trump’s Trade Threats_2

Some analysts, think the bloc needs to be tougher. One idea is to crack down on American services, where the U.S. had a 109 billion euro, surplus with the EU in 2023. Another is to activate its “anti-coercion instrument,allow retaliation against U.S. companies operating in the bloc. Yet another is to threaten to ban exports of critical goods, such as the lithographic equipment necessary to make semiconductors.

Extreme events may require extreme responses. But for now, the EU should keep its cool. It should not kid itself that it is stronger or more united than it is. It should remember that Trump may get weaker with time. And it should never forget Ukraine.

Source: Reuters

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Adam

Commodity

Gold prices are modestly lower in early U.S. trading Monday, amid a lack of major, new fundamental developments to drive daily price action. Silver prices are higher and hit another 13-year high overnight. August gold was last down $8.00 at $3,338.60. July silver prices were last up $0.401 at $36.54.

Asian and European stocks were mixed overnight. U.S. stock indexes are pointed to mixed openings today in New York.

U.S. and China trade officials are scheduled to meet in London today. President Trump said the talks “should go very well.” In overnight news, China reported its exports to the U.S. fell 35% in May, year-on-year. That was the biggest drop since the pandemic in 2020.

Other China economic data released Monday was downbeat, showing deflationary price pressures and a drop in imports in May. The export growth pace also slowed in May.

The key outside markets today see the U.S. dollar index weaker. Nymex crude oil futures prices are near steady and trading around $64.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently at 4.496%.

U.S. economic data due for release Monday includes the employment trends index and monthly wholesale trade.

Gold price down a bit as traders await fresh news_1

Technically, August gold futures bulls have the firm overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at last week’s high of $3,427.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $3,250.00. First resistance is seen at $3,350.00 and then at $3,375.00. First support is seen at the overnight low of $3,313.10 and then at $3,300.00. Wyckoff's Market Rating: 7.0.

Gold price down a bit as traders await fresh news_2

July silver futures bulls have the strong overall near-term technical advantage. Prices are trending higher on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $40.00. The next downside price objective for the bears is closing prices below solid support at $34.00. First resistance is seen at $36.75 and then at $37.00. Next support is seen at $36.00 and then at $35.80. Wyckoff's Market Rating: 8.5.

source : kitco

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Glendon

Economic

Forex

The latest economic data reveals a slight uptick in U.S. Wholesale Inventories, indicating a modest but steady growth in the total value of goods held in inventory by wholesalers. The actual figure came in at 0.2%, surpassing the forecasted stagnation.

The 0.2% increase in Wholesale Inventories, while small, is significant in that it beat the forecasted figure of 0.0%. This suggests that wholesalers are maintaining a higher inventory level than anticipated, which could be interpreted as a positive sign for the U.S. economy. It indicates a level of confidence in the market, as wholesalers are willing to hold onto more stock in anticipation of future sales.

When compared to the previous figure of 0.4%, the current 0.2% does represent a decrease. This indicates that while there has been growth, it is at a slower pace than before. The previous figure’s higher percentage could be attributed to a more robust economic climate at the time, or a higher level of confidence in future market conditions.

However, it is important to note that a higher than expected reading for Wholesale Inventories is typically seen as negative or bearish for the U.S. Dollar. This is because a build-up of inventories can indicate a slowdown in demand, which can negatively impact the economy and, by extension, the value of the currency. Conversely, a lower than expected reading is viewed as positive or bullish for the U.S. Dollar.

In this case, the actual figure of 0.2% is lower than the previous 0.4%, which could be seen as a positive sign for the U.S. Dollar. However, it is higher than the forecasted 0.0%, which could be seen as a negative. As such, the impact on the U.S. Dollar is likely to be mixed.

Overall, the latest Wholesale Inventories data paints a picture of modest growth in the U.S. economy. While the pace of growth may have slowed compared to the previous period, the fact that the actual figure beat forecasts suggests a level of resilience and confidence among wholesalers.

Source: Investing

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Michelle

Cryptocurrency

Bitcoin is approaching a critical resistance level after recovering from last week’s sharp sell-off. The cryptocurrency traded at $106,685 during early Monday trading, registering a 1.41 percent increase over the past 24 hours.

After dipping to a weekly low of $100,377, Bitcoin has now recorded four consecutive days of gains. Bitcoin moved up to a record high of $106,958 before pausing not far from $107,000. After lowering for three straight days, last week’s highest price was $106,901. This level is developing strong resistance that could impact prices soon.

Swissblock has stated that market participants are getting ready for possible swings due to important reports expected soon. The consumer price index report will come out on Wednesday, and the producer price index report will be released a few days later. These reports might have a strong impact on investors’ views of the market.

If the inflation rate surpasses forecasts, investors may again worry about tightening monetary policy. Additionally, if the economic signals are weak, this could help a rally in risk assets, including Bitcoin. Traders are keeping an eye on how the market acts, as it may decide the market’s next direction.

Support Levels and Bullish Setups Emerge Despite Caution

While short-term resistance looms, technical indicators suggest a strengthening structure on the bullish side. According to Swissblock via X, bulls appear to be regrouping and preparing for a shift in momentum. Market caution remains, but recent price behavior hints at attempts to reverse last week’s weakness.

In the upcoming period, Bitcoin could go lower, trying to reach around $104,000, before making a notable move higher. According to Glassnode, Bitcoin is well supported by essential levels, including $103,700 and $95,600. This would make it possible for companies to cope if profit-taking increases.

The current short-term holder cost basis, valued at approximately $97,100, previously played a key role in shaping short-term market expectations. Additionally, the wider view of the market reveals that the resistance lies at $114,800, and the support is at $83,200. Gains or losses beyond this range could affect Bitcoin’s future direction for some time.

This week, key attention is on inflation numbers because they may significantly influence monetary policy. Bitcoin is presently moving above $107,000 and below $104,000. Traders are on alert for signs that may confirm whether bulls are indeed regaining control or if a deeper pullback is imminent.

Source: CryptoSlate

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Warren Takunda

Economic

US Treasuries were trimming overnight gains, with modest weakness in longer dated debt as investors awaited a Thursday auction of 30-year securities that will offer a fresh test of demand for the beleaguered securities.

An early rally that mirrored moves in European bonds lost steam ahead of the Wall Street open for equity trading. Treasuries were clinging to gains on maturities out to the 10-year. That left US government bonds still nursing the bulk of sharp losses from Friday’s stronger-than-expected US jobs report that saw traders dial back Federal Reserve interest rate cut expectations.

A quieter day for economic data Monday is shifting attention to US and China trade talks in London, and events later this week, including consumer inflation on Wednesday and the debt sale the following day. While scheduled bond auctions are typically routine affairs, Thursday’s $22 billion offering will be particularly scrutinized given the recent volatility in long-dated global bonds. Yields have soared in recent weeks amid growing concern over major governments’ spiraling debt and deficits.

“The 30 year is a kind of tail risk type of rate,” said Jeffrey Klingelhofer, portfolio manager at Aristotle Pacific Capital LLC in Newport Beach. “Concerns over deficit spending” matter far more for the long end than, “the seven to 10 year and certainly the shorter part of the curve,” he said.

The US 30-year yield has been marching higher since early April, hitting a peak of 5.15% on May 22, the highest since 2023. It was up around two basis points at 4.99%, from a session low of 4.94% on Monday, while the 10-year yield hovered around 4.51%.

“This is going to be key and really set the tone into June as a whole,” said Lauren van Biljon, fixed income portfolio manager at Allspring Global Investments, on Bloomberg TV, about the 30-year Treasury auction. “We know how much anxiety there is around longer-term financing.”

Mike Riddell, a portfolio manager at Fidelity International, said he’s entered a steepener position, which profits from long-dated bonds underperforming shorter ones. Like PGIM Fixed Income, he said the forces driving ultra-long bonds have shifted away from monetary policy.

“It’s no longer about policy rates, it’s all about the fiscal story and demand supply dynamics,” Riddell said. It’s “really concerning” that there “doesn’t appear to be any change in policy on the back of these market moves,” he added.

The US will also hold auctions for three and 10-year notes on Tuesday and Wednesday, respectively. Bond traders must also navigate the May CPI report, with economists surveyed by Bloomberg forecasting the year-on-year rate ticking up from 2.3% to 2.5%.

“Signs of inflation pressure could knock risk sentiment, and it may even limit dollar upside, especially if it threatens the US’s 30-year Treasury auction on Thursday,” Kathleen Brooks, research director at XTB wrote in a note.

Source: Bloomberg

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Glendon

Political

Russia-Ukraine Conflict

Russia hit Ukraine overnight with its largest drone attack since the start of the war, causing some damage at a military airfield in the west of the country that was one of its main targets, the Ukrainian air force said on Monday.

It was the latest in Russian onslaughts since Ukraine destroyed a number of Russian bombers in drone attacks on air bases deep inside Russia earlier this month.

Ukraine's air defence units downed 460 out of 479 drones and 19 out of 20 missiles launched by the Russian forces, the air force said in a statement.

A military airfield close to Ukraine's western border was the key target, air force spokesperson Yuriy Ihnat said.

"The main strike was targeting... one of the operational air fields. There are some hits," Ihnat told Ukrainian TV, without elaborating on the damage.

The airfield is in the city of Dubno, about 60 km (40 miles) from Ukraine's border with Poland, Ukrainian regional authorities said.

Polish and allied aircraft were activated early on Monday to ensure the safety of Polish airspace, the Polish armed forces said.

Russia's Defence Ministry said the attack was another strike in response to Kyiv's attacks on Russian bases this month, adding that "all designated facilities" had been hit.

The more than three-year-old war in Ukraine has been escalating as the peace talks between Kyiv and Moscow have so far failed to yield any significant results.

The two sides remain deeply divided on how to end the war. Ukraine is pushing for an unconditional ceasefire as a first step, something Russia has repeatedly rejected.