Oil prices fall as key trade talks falter ahead of tariff deadline

New York — Oil prices fell for a third consecutive session on Tuesday, as fading hopes for a trade deal between the U.S. and Europe threatened to slow economic activity in the world’s largest oil markets.

Brent crude futures were down 92 cents, or 1.3%, to $68.29 a barrel by 12:03 p.m. EDT. U.S. West Texas Intermediate crude futures for August delivery, set to expire on Tuesday, fell $1.09, or 1.6%, to $66.11 per barrel.

The more active September WTI contract was down 92 cents, or 1.4%, to $65.03 a barrel.

The European Union was exploring a broader set of possible counter-measures against the U.S. as prospects for an acceptable trade agreement with Washington fade, EU diplomats told Reuters on Tuesday.

U.S. President Donald Trump, who has set an August 1 deadline for countries to secure trade deals or face steep tariffs, earlier threatened a 30% tariff on EU imports if a deal is not reached.

Prospects of an interim trade deal between the U.S. and India before that deadline have also dimmed, two Indian government sources told Reuters.

Diesel was the top decliner across the energy complex, reflecting concerns about the economic outlook. The industrial fuel, used predominantly in manufacturing, construction and heavy transport, had been the top performer in oil markets over recent weeks due to tight global supplies.

U.S. ultra-low sulfur diesel futures slid more than 3% on Tuesday to $102.16 a barrel.

Still, crude price declines may be limited by the possibility that the U.S. could scale back the tariffs it has threatened or even delay them, Ritterbusch and Associates said.

Meanwhile, a Reuters poll of analysts showed U.S. crude oil inventories likely fell by about 600,000 barrels in the week to July 18.