Oil prices experienced a slight dip on Thursday, influenced by a rise in U.S. gasoline and diesel stocks, alongside Saudi Arabia’s decision to cut its July prices for Asian crude buyers. This downturn comes amid increasing global economic uncertainty, which has further exerted pressure on prices. Brent crude futures saw a minimal decline of 1 cent, landing at $64.85 a barrel early in the morning, while U.S. West Texas Intermediate crude dropped by 11 cents, or 0.2%, to $62.74 a barrel. On Wednesday, oil prices had already closed approximately 1% lower after official reports revealed a larger-than-anticipated increase in U.S. gasoline and distillate inventories, signaling weaker demand in the world’s largest economy.
Saudi Arabia, known as the world’s leading oil exporter, recently reduced its July pricing for Asian crude to levels not seen in nearly four years. Analysts at ANZ noted that although the price cut was smaller than expected, it still indicates a soft demand environment, especially as the industry transitions into its peak demand season. This price adjustment by Saudi Arabia also followed the OPEC+ decision to increase output by 411,000 barrels per day for July. The joint strategy pursued by Saudi Arabia and Russia aims to penalize nations that exceed their quotas and reclaim lost market share.
Weak economic indicators from the U.S. and fluctuating U.S.-China trade relations have further contributed to the declining oil prices. Independent market analyst Tina Teng pointed out that a bleak global economic outlook has dimmed demand prospects, prompting increased caution among investors awaiting advancements in trade discussions between these two major economies. Recent data revealed a contraction in the U.S. services sector for the first time in nearly a year, along with rising input costs, raising concerns about slow economic growth coupled with persistent inflation. Adding to the tensions, President Trump described negotiations with China’s Xi Jinping as challenging, thus highlighting ongoing friction amid trade talks.
Meanwhile, Canada is contemplating potential retaliations, and the European Union is reporting progress in negotiations, heightening the urgency to resolve issues stemming from new U.S. tariffs on metals.