Oil Falls for Fourth Straight Day as Market Watches Trade Developments
Oil prices declined for a fourth consecutive session on Wednesday, as traders weighed the implications of a U.S.-Japan tariff agreement ahead of a key round of U.S.-EU trade negotiations scheduled for later in the day.
By 11:55 a.m. EDT (15:55 GMT):
- Brent crude futures slipped 30 cents (0.44%) to $68.29 per barrel
- U.S. West Texas Intermediate (WTI) crude dropped 28 cents (0.43%) to $65.03 per barrel
Both benchmarks had already lost around 1% the previous day following news that the EU was preparing countermeasures in response to U.S. tariffs.
On Tuesday, President Donald Trump announced a trade deal with Japan that reduces tariffs on auto imports and exempts Tokyo from further punitive tariffs in exchange for $550 billion in investment and loans directed to the U.S.
“The recent price slide seems to be stabilizing, but I doubt the U.S.-Japan deal will provide much upward momentum,” said Vandana Hari, founder of Vanda Insights, citing continued uncertainty in EU and China trade negotiations as a drag on market sentiment.
🇪🇺 EU Prepares Response as Talks Continue
The European Commission is planning to propose retaliatory tariffs on €93 billion ($109 billion) worth of U.S. goods, though officials emphasize that their top priority is to negotiate a resolution to avoid a looming 30% U.S. tariff threat.
EU Trade Commissioner Maros Sefcovic is scheduled to speak with U.S. Commerce Secretary Howard Lutnick from Brussels later Wednesday. EU ambassadors will then be briefed on the status of the talks.
📉 Oil Prices Trim Losses on Inventory Drop
Oil prices partially rebounded after the U.S. Energy Information Administration (EIA) reported a larger-than-expected drawdown in crude inventories.
- U.S. crude stockpiles fell by 3.2 million barrels, to 419 million
- Analysts had expected only a 1.6 million-barrel decline
“That’s a bullish shift,” said Bob Yawger, director of energy futures at Mizuho, attributing the drop to import-export imbalances.
The EIA also reported:
- U.S. crude exports rose by 337,000 barrels per day to 3.86 million bpd
- Net crude imports fell by 740,000 bpd last week
Geopolitics and Supply News Support Market
In a potential boost for prices, the U.S. energy secretary said on Tuesday that the Biden administration may consider sanctions on Russian oil to help pressure an end to the war in Ukraine.
Meanwhile, the EU approved its 18th sanctions package against Russia last Friday, including a lower price cap on Russian crude.
On the physical supply front, Azeri BTC crude exports resumed from the Turkish port of Ceyhan after several days of delays caused by intensified checks for chloride contamination, according to industry sources cited by Reuters.
