Oil Slips as Fed Meeting Looms

Key Points:

• WTI crude dipped 0.2% to $66.60, while Brent edged 0.1% lower to $69.98 after Monday’s 2% surge.
• Market awaits Fed rate guidance and clarity on US-EU energy investment targets.

Oil prices lost momentum on Tuesday following a sharp rally in the previous session, as the market digested the broader implications of the new U.S.-EU trade agreement and looked ahead to a pivotal Federal Reserve meeting. West Texas Intermediate (WTI) fell by 0.2% to $66.60 per barrel, while Brent crude eased 0.1% to $69.98.

The pullback came after both benchmarks climbed more than 2% on Monday, with Brent touching its highest level since July 18. However, enthusiasm began to wane as traders assessed the true weight of the trade deal. While the agreement avoided a full-blown trade war, its details introduced fresh ambiguity.

One core component of the deal is the EU’s pledge to purchase $750 billion in U.S. energy over President Trump’s second term.

Analysts have cast doubt on whether this figure is realistic. At the same time, European firms are expected to invest $600 billion into the U.S. economy—another ambitious target without a defined timeline.

The near-term bias remains tilted to the upside, the market is vulnerable to sharp moves triggered by unexpected central bank commentary or renewed trade tensions. The Federal Open Market Committee meets July 29–30, and while rates are likely to stay on hold, the tone of the statement could tilt dovish if inflation trends continue cooling.

Talks between U.S. and Chinese officials in Stockholm also remain in focus. Monday’s five-hour meeting showed a willingness to extend the current truce, though the outcome remains uncertain.

President Trump’s warning to Russia about a 10–12 day deadline to act on Ukraine tensions adds another layer of geopolitical risk.

Technical Analysis

Crude oil (WTI) surged to a session high of $67.123 on the 29th before retreating below the 5- and 10-period moving averages. The price action shows a clear uptrend from the low of $64.979, but the rally appears to be losing steam as the MACD crosses lower and the histogram shifts into negative territory.

Picture: Crude oil retreats after failing to hold $67 breakout, as seen on the VT Markets app

The failure to hold above the $67 handle suggests a weakening of bullish momentum. This aligns with broader sentiment after recent API data hinted at a potential build in US crude inventories and ongoing concerns about Chinese demand weighed on energy markets. If the price holds above $66.40, a rebound remains possible. A break below may expose the $65.60 zone as the next downside target.

Cautious Forecast

WTI remains supported above $66.50, but without a clear catalyst, the path higher could stall near $67.20. Should Fed commentary surprise markets or trade talks falter, crude may retrace toward the $66.00 level. Volatility is expected to increase around the FOMC outcome.

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