Wednesday saw oil prices dip, as markets analysed the results of US-China trade discussions, which still await President Donald Trump’s review.
Market pressures included weak oil demand from China coupled with increased output from OPEC+.
“Despite recent strength, and what could be viewed as a potential breakout, oil has yet to push out of a trading range which has been building over the last two months,” said David Morrison, senior market analyst at Trade Nation.
Prices appear to be pausing as they await a fresh catalyst.
This seems likely to come from supply commentary, or trade developments, particularly any news from US-China trade talks.
At the time of writing, the price of West Texas Intermediate crude oil on the New York Mercantile Exchange was at $65.07 a barrel, largely unchanged from the previous close. Brent crude oil on the Intercontinental Exchange was also flat at $66.89 a barrel.
Both benchmarks had fallen earlier in the session on Wednesday.
Experts believe that oil prices have experienced brief periods of bullishness, but those have not materialised into substantial rallies.
From a bullish standpoint, the daily moving average divergence convergence appears generally constructive. It has returned to and continues to rise above the neutral level.
“But crude has been in this situation many times over the past year or so. And rally attempts have tended to be snuffed out relatively quickly,” Morrison said.
Trade negotiations
Following intense two-day London talks, US Commerce Secretary Howard Lutnick reported Tuesday that American and Chinese officials have established a framework aimed at restoring their trade agreement and addressing China’s export limitations on rare earth minerals and magnets.
Trump will be briefed on the outcome before approving it, Lutnick added.
Meanwhile, a federal appeals court handed Trump a victory Tuesday, deciding his “Liberation Day” tariffs could remain in place for now.
This reverses a prior decision by the US Court of International Trade, which had deemed the tariffs’ enactment illegal and blocked their implementation last month.
The oil market remains cautious amid the increasingly complex trade narratives of the Trump administration.
Supply
Simultaneously, regarding supply, OPEC+ intends to raise oil output by 411,000 barrels daily in July, continuing their fourth consecutive month of easing production cuts.
Some experts, however, question if regional demand will be sufficient to absorb this additional supply.
The summer driving season in the US is likely to generate some demand for fuel in the world’s biggest consumer of crude oil.
However, experts remain skeptical about whether global oil demand could meet OPEC’s supply increases.
Eight countries from the OPEC+ group, including Saudi Arabia and Russia have been raising output of oil by 411,000 barrels a day each month since May.
EIA predicts fall in US production
According to the latest Short-Term Energy Outlook, published late on Tuesday, the Energy Information Administration (EIA) has adjusted its 2026 projections for US crude oil production downward.
The EIA now forecasts a 50,000 barrel per day year-on-year decrease in 2026, bringing output to 13.37 million barrels per day.
Notably, this projected decline would mark the first annual drop in US production since 2021, when production was impacted by the COVID-19 pandemic.
For 2025, annual output growth is projected to remain constant at 210,000 barrels per day year-over-year.
“The decline isn’t too surprising, given the recent slowdown in drilling activity,” Warren Patterson, head of commodities strategy at ING Group, said.
A 33-rig decline over the past six weeks has pushed the US oil rig count to 442, marking its lowest point since October 2021, amid the current period of low prices.
ING’s Patterson added:
Given our view that oil prices will be lower towards the end of this year, there’s scope for further downward revisions in US crude oil output estimates for next year.
Uncertainties in refined product market
Amid rising uncertainty in the refined products market, the European Commission, led by President Ursula von der Leyen, has proposed an import ban on goods derived from Russian crude oil.
The European Union has prohibited imports of Russian crude oil and refined products.
However, refined products derived from Russian crude are still entering the bloc through third-party countries.
“This would mostly put refined product imports from India and Turkey at risk,” Patterson said.
India and Turkiye are significant importers of Russian crude oil, collectively receiving 1.77 million barrels per day in the first quarter of 2025, as per LSEG data.
Concurrently, India and Turkiye are also exporters of refined petroleum products to the European Union, which imported over 350,000 barrels daily from these two nations.
Patterson added:
Such a move would lead to yet another shift in refined product trade flows. But the Commission implementing such a ban would be difficult, given that refiners blend different types of crude oil.
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