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Tuesday, July 29, 2025
What’s happening: Crude oil rose sharply on Monday amid renewed concerns over tighter supplies around the world.
What happened: US President Donald Trump announced plans to shorten the deadline to impose further sanctions on Russia unless it ends the ongoing war in Ukraine.
A trade agreement between the US and the European Union provided a boost to the oil demand outlook.
Why it matters: Brent crude climbed to its highest level in 10 days after Trump said he was reducing the 50-day deadline given to Russia to 10-12 days to agree to a ceasefire or face secondary sanctions.
The US and EU reached a framework trade agreement, avoiding a transatlantic trade war. The deal was reached just before the August 1 deadline for the US to impose a 30% tariff rate on EU imports in case no agreement was reached.
Trump also said that the EU is looking to invest around $600 billion in the US and significantly boost its purchases of US energy and military equipment.
A possible extension of the tariff-pause between the US and China also lent support to oil prices. This announcement came after the recent trade deals, including the one with Japan, alleviated concerns around tariffs weighing on global economic growth and impacting energy demand.
Strength in the US dollar weighed on oil prices, as a higher greenback makes commodities more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose to 98.63 on Monday.
Brent crude futures gained $1.60, or 2.3%, to $70.04 a barrel on Monday, while WTI crude jumped $1.55, or 2.4%, to settle at $66.71 a barrel.
In other energy trading, gasoline settled at $2.1021 a gallon, while heating oil closed at $2.4036 a gallon and natural gas at $3.066 per million British thermal units.
What to watch: Investors await the upcoming meeting of the Joint Ministerial Monitoring Committee, which includes top ministers from the OPEC and its allies.
Data on US crude oil stockpiles from the Energy Information Administration (EIA), due to be released on Wednesday, will also remain in focus. Crude oil inventories in the US declined by 3.169 million barrels in the week ended July 18, higher than market estimates of a contraction of 1.6 million barrels. Among refined fuels, gasoline stockpiles fell by 1.738 million barrels during the week, while stockpiles of distillate fuels climbed by 2.931 million barrels.
Context: Equity markets in the US closed mixed on Monday, with the S&P 500 closing at a record high for the sixth session in a row.
Details: US President Donald Trump and European Commission President Ursula von der Leyen reached a framework trade agreement, cutting EU import tariffs to 15% before the August 1 deadline.
On the economic data front, the Dallas Fed’s general business activity index for Texas manufacturing climbed to 0.9 in July, from -12.7 in the previous month, indicating stability after falling for five months.
The Federal Reserve will announce its policy decision on Wednesday. The central bank is widely expected to keep rates unchanged, despite Trump increasing pressure on Chairman Jerome Powell to slash rates.
Shares of Nike gained around 4% on Monday after JPMorgan upgraded its rating on the stock from Neutral to Overweight.
Energy was the top performing sector in the session, following a sharp surge in oil prices. Real estate and materials were the weakest performers.
The Dow Jones index fell 64.36 points, or 0.14%, to close at 44,837.56 on Monday. The S&P 500 rose 0.02% to 6,389.77, while the Nasdaq 100 gained 0.36% to reach 23,356.27.
What to watch: Investors will continue monitoring trade-related announcements from the US.
Data on goods trade balance (1630 UAE Time), wholesale inventories (1630 UAE Time) and S&P/Case-Shiller home price index (1700 UAE Time), due to be released today, will remain in focus. The US trade deficit in goods, which widened to $96.6 billion in May from $87.0 billion in the previous month, is expected to rise further to $98.4 billion in June.
US wholesale inventories, which declined by 0.3% to $905.5 billion in May, are projected to contract by 0.1% in June. Analysts expect the S&P CoreLogic Case-Shiller home price index to rise by 3% year-over-year in May, following a 3.4% gain in April.
Other Markets: European indices closed lower on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.43%, 1.02%, 0.43% and 0.22%, respectively.
Ukraine’s President Volodymyr Zelenskyy praised US President Donald Trump for taking a clear stance and thanked him for his focus on stopping the ongoing war with Russia. The news sent the RUB/USD pair lower in forex trading this morning.
Sri Lanka’s Producer Price Index came in unchanged year-over-year in May, following a 1.0% decline in April, exerting slight pressure on the LKR/USD forex pair.
Mexico posted a trade surplus of $514 million in June, compared to a deficit of $2.41 billion in the same month last year. However, the latest reading falling short of market estimates of a $610 million surplus sent the MXN/USD pair lower in forex trading this morning.
India’s industrial production grew by 1.5% year-over-year in June, following a 1.2% gain in the previous month. The recent reading coming in below market estimates of 2% growth exerted pressure on the INR/USD forex pair.
China’s foreign direct investment declined by 15.2% year-over-year to 423.23 billion yuan in the first half of the year, which exerted pressure on the CNY/USD pair this morning.
European Central Bank’s consumer inflation expectations (1200 UAE Time), UK’s mortgage approvals (1230 UAE Time), mortgage lending (1230 UAE Time), M4 money supply (1230 UAE Time), net lending to individuals (1230 UAE Time), Treasury Gilt 2028 auction (1300 UAE Time) and Bank of England consumer credit (1230 UAE Time), Italy’s 6-month BOT auction (1310 UAE Time), Germany’s 5-year Bobl auction (1330 UAE Time), France’s unemployment benefit claims (1400 UAE Time) and jobseekers total (1400 UAE Time), as well as US retail inventories (1630 UAE Time), Redbook (1655 UAE Time), FHFA house price index (1700 UAE Time), JOLTs job openings (1800 UAE Time), CB consumer confidence (1800 UAE Time), JOLTs job quits (1800 UAE Time), Dallas Fed services index (1830 UAE Time), Dallas Fed services revenues index (1830 UAE Time), 2-year FRN auction (1930 UAE Time) and 7-year Note auction (2100 UAE Time).
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