Investors are weighing the potential impact of U.S. President Donald Trump’s tariffs on global economic growth, a move which steadied oil prices on Thursday.
Brent crude futures were up 4 cents at $70.23 a barrel by 6:AM WAT. U.S. West Texas Intermediate crude fell 1 cent to $68.37 a barrel.
Supporting oil prices, however, is a weaker U.S. dollar in today’s Asia trading session. A weaker dollar lifts oil prices by making it cheaper for holders of other currencies.
Also supporting prices, U.S. crude stocks rose while gasoline and distillate inventories fell last week, the Energy Information Administration said on Wednesday. Gasoline demand rose 6% to 9.2 million barrels per day last week, the EIA said.
On the demand side, macro uncertainty has led to a more cautious buying environment, particularly in Asia, a Reuters report said, quoting analytics firm Kpler in a note. He noted that geopolitical risk premiums have faded with the Israel-Iran ceasefire holding.
Additionally, there is doubt that the recent increase in production quotas announced by OPEC+ will result in an actual increase in production, as some members are already exceeding their quotas, said Tony Sycamore, an analyst at IG.
“And others, like Russia, are unable to meet their targets due to damaged oil infrastructure,” he said.
OPEC+ oil producers are set to approve another big output boost for September, as they complete both the unwinding of voluntary production cuts by eight members and the United Arab Emirates’ move to a larger quota.
On Wednesday, Trump threatened Brazil, Latin America’s largest economy, with a punitive 50% tariff on exports to the U.S., after a public spat with his Brazilian counterpart, Luiz Inacio Lula da Silva.
He has also announced plans for tariffs on copper, semiconductors and pharmaceuticals, and his administration sent tariff letters to the Philippines, Iraq and others, adding to over a dozen letters issued earlier in the week, including for powerhouse U.S. suppliers South Korea and Japan.
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As policymakers remain worried about the inflationary pressures from Trump’s tariffs, a Reuters report noted that only “a couple” of officials at the Federal Reserve’s June 17-18 meeting said they felt interest rates could be reduced as soon as this month, the minutes released on Wednesday showed.
Higher interest rates make borrowing more expensive and reduce oil demand.
Global daily flights were averaging 107,600 in the first eight days of July, an all-time high, with flights in China reaching a five-month peak and port and freight activities indicating “sustained expansion” in trade activities from last year, JP Morgan said in a client note.
Shell said it expects quarterly earnings to be hit by weaker trading in its integrated gas division and losses at its chemicals and products operations.
“Year to date, global oil demand growth is averaging 0.97 million barrels per day, in line with our forecast of 1 million barrels per day,” the note said.
