WTI trades with caution below $66.00 on persisting global trade uncertainty

• The Oil price seems vulnerable near the weekly low around 65.00 amid global trade jitters.
• Signs of escalating US-EU trade tensions could weigh on the Oil price.
• Traders pare Fed dovish bets as the impact of Trump's tariffs has started feeding into inflation.

West Texas Intermediate (WTI), futures on NYMEX, trades cautiously around $65.70 during the late Asian trading session on Wednesday. The Oil price oscillates close to near the weekly low as investors remain uncertain over the energy demand amid persistent global trade tensions.

The announcement of reciprocal tariffs by the United States (US) on its leading trading partners such as the European Union (EU), Japan, Canada, Mexico and South Korea along with 17 more nations has prompted uncertainty over global trade harmony.

US President Donald Trump has imposed tariffs on 22 nations for failing to reach a trade agreement during the 90-day reciprocal levy pause. Meanwhile, the EU has also prepared proportionate countermeasures if it fails to strike a deal with the US before the new August 1 deadline. The imposition of countermeasures by the EU on imports from the US could propel trade tensions as Trump has already warned that he will raise additional duties in case of retaliation by any economy.

Meanwhile, accelerating inflationary pressures in the US as importers start passing the impact of tariffs on consumers have raised doubts whether the Federal Reserve (Fed) will reduce interest rates in the September policy meeting, a scenario that is unfavorable for the Oil price.

On Tuesday, the Consumer Price Index (CPI) report for June showed that prices of a number of products imported by the US grew sharply, led to a sharp increase in the headline inflation to 2.7% on year, as expected.

Market experts have warned that current price pressures reflect seldom effect of sectoral tariffs and the impact of additional levies announced by President Trump on nations is yet to be filtered through. This would allow Fed officials to demand more time for assessing the impact of tariffs on inflation.