Photo caption: Oil facility
Oil edged lower on Thursday after a build in U.S. gasoline and diesel inventories and cuts to Saudi Arabia’s July prices for Asian crude buyers, with global economic uncertainty weighing on prices as well.
Brent crude futures fell 1 cent to $64.85 a barrel at 0630 GMT. U.S. West Texas Intermediate crude lost 11 cents, or 0.2%, dropping to $62.74 a barrel.
Oil prices closed around 1% lower on Wednesday after official data showed that U.S. gasoline and distillate stockpiles grew more than expected, reflecting weaker demand in the world’s top economy. [EIA/S]
Adding to the weakness, Saudi Arabia, the world’s biggest oil exporter, cut its July prices for Asian crude buyers to nearly the lowest in four years.
“While the (Saudi) decrease was smaller than anticipated, it suggests demand is soft despite entering the peak demand period,” said ANZ analysts in a note.
The price cut by Saudi Arabia follows the OPEC+ move over the weekend to increase output by 411,000 barrels per day for July. OPEC+ is made up of members of the Organization of the Petroleum Exporting Countries and allies such as Russia.
The strategy of OPEC+ group leaders Saudi Arabia and Russia is partly to punish over-producers and to wrestle back market share, Reuters has reported.
Weak U.S. economic data and ongoing developments in U.S.-China trade relations also weighed on oil prices, said independent market analyst Tina Teng.
“Simply put, a gloomy global economic trajectory dimmed the demand outlook,” she said.
“Markets are cautiously watching for any progress in trade talks between the world’s two top economies.”
Data on Wednesday showed that the U.S. services sector contracted for the first time in nearly a year in May while businesses paid higher prices for inputs, indicating the American economy remains in danger of slow growth and high inflation.
On the trade front, U.S. President Donald Trump said on Wednesday that China’s Xi Jinping was tough and “extremely hard to make a deal with”, exposing friction between Beijing and Washington after the White House had raised expectations for a long-awaited Xi-Trump phone call this week.
Meanwhile, Canada prepared possible reprisals and the European Union reported progress in trade talks as new U.S. metals tariffs triggered more disruption in the global economy and added urgency to negotiations with Washington.
“Uncertainty fuelled by President Trump’s shifting stance on tariffs has intensified fears of a global economic slowdown,” analyst Ole Hansen at Saxo Bank said in a note.
=== Reuters ===
