Oil Prices Edge Lower as Markets Digest US-China Trade Progress and Rising Supply Concerns
Oil prices slipped in Asian trading on Wednesday as investors evaluated the results of recent U.S.-China trade negotiations, which still await President Donald Trump’s review. Softer oil demand from China and increasing output from OPEC+ also weighed on sentiment.
Brent crude futures dropped 19 cents, or 0.3%, to $66.68 per barrel, while U.S. West Texas Intermediate (WTI) crude dipped 16 cents, or 0.3%, to $64.82 by 0318 GMT.
U.S. Commerce Secretary Howard Lutnick announced Tuesday that the U.S. and China had reached a preliminary agreement to renew their trade truce and resolve disputes over China’s restrictions on rare earth exports and magnets, following two days of negotiations in London.
“The recent pullback in oil prices is likely driven by a combination of profit-taking and investor caution ahead of the official announcement on the trade talks,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Lutnick added that President Trump would be briefed on the outcome before any final approval is made.
From a market perspective, this trade development could help stabilize both the Chinese and U.S. economies, potentially lifting crude demand and supporting prices, noted Tony Sycamore, market analyst at IG.
OPEC+ Supply Increases Add Pressure
On the supply side, OPEC+ plans to boost production by 411,000 barrels per day in July, marking the fourth consecutive month of easing production curbs. However, analysts remain uncertain whether regional demand will be strong enough to absorb the additional supply.
Hamad Hussain, a climate and commodities economist at Capital Economics, noted that stronger seasonal demand in OPEC+ countries—particularly Saudi Arabia—could help balance out the extra barrels and lend support to prices. Still, he predicted that Brent crude could fall to $60 per barrel by year-end, as any demand surge is expected to be temporary.
Market Focus Turns to U.S. Inventory Data
Later Wednesday, market participants will shift their attention to the U.S. Energy Information Administration’s weekly crude inventory report.
Preliminary figures from the American Petroleum Institute released Tuesday showed a modest decline of 370,000 barrels in U.S. crude stockpiles last week. Analysts surveyed by Reuters on Monday had anticipated a larger drawdown of 2 million barrels for the week ending June 6, with expectations that gasoline and distillate inventories increased during the same period.
