Morning Highlights: Oil steady as Trump extends China tariff truce; markets eye Putin meeting, CPI data

Tuesday, August 12, 2025

Oil prices were little changed Tuesday, with investors weighing President Trump’s 90-day extension of a trade truce with China against uncertainty over his upcoming “feel-out” meeting with Russia’s Vladimir Putin. Caution prevailed ahead of key US inflation data, while Asian equities rallied on tariff relief and chip-sector optimism.

Market Snapshot (as of 06:00 EST):

Brent (Oct): $66.84 (▲$0.19 / +0.25%)

WTI (Sep): $64.27 (▲$0.33 / +0.25%)

Volumes in both benchmarks remain below seasonal averages, with traders awaiting fresh signals from this week’s OPEC and EIA reports.

Trump Extends China Truce, Softens Tariff Risk

President Trump extended the pause on elevated US tariffs for Chinese goods until early November, averting an immediate hit to trade flows. The move supported Asian markets, with Japan’s Nikkei-225 hitting a record high on reopening from a holiday, led by chipmakers after Trump signaled openness to allowing Nvidia to sell a scaled-down AI chip to China.

In South Korea, stocks gained on news President Lee will visit Washington later this month for his first meeting with Trump.

Putin Meeting Expectations Low

Trump downplayed his Friday summit with Putin in Alaska as a “feel-out meeting,” tempering hopes for rapid progress on a Ukraine ceasefire. Russia’s oil exports remain steady at ~3.1M b/d despite tariff threats, with most Pacific cargoes bound for China. Indian refiners are gradually sourcing more Middle Eastern crude in response to the 25% US tariff on Indian exports, pressuring Brent’s premium over Dubai to near multi-year lows.

Ukraine has escalated refinery strikes, including a drone attack on Rosneft’s Saratov plant that halted crude intake. Lower Russian processing could boost exports in coming weeks.

Macro Drivers & Cross-Markets

Asia: CSI 300 +0.6%, Nikkei-225 record close, KOSPI firmer.

FX: Yen weaker, EUR steady, GBP flat; AUD slips after RBA cuts rate 25 bps to 3.6%.

Crypto: Bitcoin and Ether extended Monday’s rally, each +~3%.

Commodities: Iron ore + on China steel output curbs; gold modestly higher.

Energy Market Technicals & Spreads

Brent Oct-Nov spread: +57¢/bbl backwardation (-10¢ d/d)

WTI Sep-Oct spread: +87¢/bbl (-1¢ d/d)

Brent resistance $68.93 (13-day MA), support $65.00.

WTI closed below 5-day MA for 7th straight session, longest since May.

Heating oil and ICE gasoil cracks strongest since late July; gasoline crack softens.

Severe Weather Watch – Tropical Storm Erin

The NOAA’s latest track shows Tropical Storm Erin potentially bringing tropical-storm-force winds to the northern Leeward Islands as early as Thursday morning, with Puerto Rico and the Virgin Islands in the cone of uncertainty for Friday–Saturday impacts. While still far from the Gulf or US East Coast, marine and shipping interests are monitoring closely.

Key Events This Week

Today: US CPI (July), OPEC Monthly Oil Market Report, EIA Short-Term Energy Outlook, API inventories

Wed: IEA Oil Market Report, EIA weekly stock data

Fri: Trump-Putin summit, Baker Hughes rig count, CFTC positioning