Oil prices dipped on Wednesday as traders eyed a potential jump in US crude inventories. Crude stocks were up by 4.3 million barrels in the week ended May 9, market sources told Reuters, citing American Petroleum Institute figures.
Despite the dip, prices held near two-week highs amid relief after the United States and China agreed to temporarily lower their reciprocal tariffs. The two largest economies agreed on Monday to pause their trade war for at least 90 days, with the United States cutting tariffs to 30% from 145% and China slashing duties on US imports to 10% from 125%.
Brent crude futures fell 34 cents, or 0.51%, to $66.29 a barrel. US West Texas Intermediate (WTI) crude slipped 32 cents, or 0.5%, to $63.35. Both benchmarks had climbed more than 2.5% in the previous session.
The market is also watching US President Donald Trump’s Gulf trip, begun on Tuesday with an appearance at an investment forum in Riyadh. “The US would lift longstanding sanctions on Syria and secured a $600-billion pledge of Saudi investment,” Trump said.
Meanwhile, the US slapped fresh sanctions on about 20 companies it said were helping Iran’s Armed Forces General Staff and its front company, Sepehr Energy, send Iranian oil to China. The sanctions follow a fourth round of US-Iran talks in Oman to tackle disputes over Iran’s nuclear program.
The recent fluctuations in oil prices can be attributed to various factors, including the surge in US crude inventories and ongoing trade tensions. Here’s what’s further impacting the market:
- Trade War Developments: The temporary pause in the US-China trade war has brought some relief to the market, with the US cutting tariffs to 30% from 145% and China slashing duties on US imports to 10% from 125%. This agreement is expected to last for at least 90 days.
- US Crude Inventories: The American Petroleum Institute reported a 4.3 million barrel increase in US crude stocks for the week ended May 9. The Energy Information Administration’s weekly data, released later in the day, will provide further insights into the inventory build-up.
- OPEC+ Production: The OPEC+ Joint Ministerial Monitoring Committee meeting next Monday will be closely watched, as traders anticipate a potential increase in production. Saudi Arabia’s energy minister has held talks with OPEC+ counterparts following Trump’s call for lower oil prices.
- Trump’s Gulf Trip: US President Donald Trump’s visit to the Gulf region has led to some market speculation. Trump announced that the US would lift longstanding sanctions on Syria and secured a $600 billion pledge of Saudi investment. However, the US also imposed fresh sanctions on companies helping Iran’s Armed Forces General Staff send Iranian oil to China.
- Market Outlook: Analysts expect oil prices to remain volatile in the short term, influenced by trade tensions, US crude inventories, and OPEC+ production decisions. With Brent crude futures at $66.29 and WTI crude at $63.35, traders will be watching these developments closely.