Summary

U.S., China extend tariff pause to November

Eyes on U.S. inflation data due later on Tuesday

Trump-Putin talks on Friday cloud oil outlook

Oil prices were broadly steady on Tuesday as the United States and China extended a pause on higher tariffs, easing concerns an escalation of their trade war would hit oil consumption.

Brent crude futures lost 2 cents to $66.61 a barrel by 0904 GMT, while U.S. West Texas Intermediate crude futures eased 10 cents, or 0.2%, to $63.86.

U.S. President Donald Trump extended a tariff truce with China to November 10, staving off triple-digit duties on Chinese goods as U.S. retailers prepared for the critical end-of-year holiday season.

This raised hopes that an agreement could be attained between the world's two largest economies and avert a virtual trade embargo between them. Tariffs risk slowing global growth, which could sap fuel demand and drag oil prices lower.

Oil's gains have also been supported by fresh signs of softness in the U.S. labour market, which have boosted expectations for a Federal Reserve rate cut in September, said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova.

Also on the radar is U.S. inflation data later in the day, which could shape the Fed's rate path. Interest rate cuts typically boost economic activity and oil demand.

Potentially weighing on the oil market, Trump and Russian President Vladimir Putin are due to meet in Alaska on Friday to discuss an end to the war in Ukraine.

The meeting comes as the U.S. steps up pressure on Russia, with the threat of harsher penalties on Russian oil buyers such as China and India if no peace deal is reached.

Trump set a deadline of last Friday for Russia to agree to peace in Ukraine or have its oil buyers face secondary sanctions, while pressing India and China to reduce purchases of Russian oil.

"If Friday's meeting brings a ceasefire or even a peace deal in Ukraine closer, Trump could suspend the secondary tariffs imposed on India last week before they come into force in two weeks," Commerzbank said in a note.

"If not, we could see tougher sanctions against other buyers of Russian oil, like China".

Source: Reuters