Ease of oil prices due to US tariff uncertainty ahead of expected increase in OPEC+ output
By Nicole Yao
NEW YORK (Reuters) – Oil prices fell slightly on Thursday as investors worried that US tariffs would slow down the expected post-supply energy demand from major crude oil producers.
Brent crude futures settled at 31 cents (0.45%) at $68.80 per barrel. U.S. West Texas middle-level crude fell 45 cents (0.67%) on the eve of the Independence Day holiday to $67 in thin trade.
President Donald Trump’s 90-day suspension on the implementation of higher tariffs in the US ended on July 9, with some large trading partners still not winning trade deals, including the European Union and Japan. Oil traders are worried about the impact on the economy and fuel demand.
A preliminary trade agreement between the US and Vietnam raised prices on Wednesday, but overall tariff uncertainty will increase.
Also, price-weighted, OPEC+ is expected to agree to an increase of 411,000 barrels per day at this weekend’s policy meeting. Private sector research also found that service activities in China, the world’s largest oil importer, expanded in June at the slowest pace in nine months as demand weakened and new export orders fell.
In the US, the creation of crude inventory surprises also underscores demand concerns among the world’s largest crude oil consumers.
The U.S. Energy Information Administration said Wednesday that domestic crude oil stocks rose by 3.8 million barrels last week to 419 million barrels. Analysts in the Reuters poll were hoping for a drawdown of 1.8 million barrels.
This week, the US energy company cut the lowest number of oil rigs since September 2021 by 7-425, energy services company Baker Hughes said in a closely followed report on Thursday. The oil rig count is an indicator of future output.
U.S. employment growth was strong in June, but unemployment rates fell unexpectedly, data showed Thursday. However, almost half of the increase in non-farm salaries comes from the government sector, and private sector profits have been significantly slowed as industries such as manufacturing and retail work to tackle aggressive tariffs on imports.
“Thursday’s employment report was stronger than expected, indicating that the resilience we’ve seen in the economy over the past few months is still unharmed. We hope that the Federal Reserve will continue its waiting-and-seeking approach to interest rates.”
Both contracts hit a weekly high on Wednesday as oil producer Iran halted cooperation with the UN nuclear watchdog and raised concerns that the prolonged conflict over the nuclear program could evolve into an armed conflict again.