Oil prices eased slightly in Asian trading on Wednesday, pulling back from seven-week highs as investors weighed weaker demand forecasts and awaited the outcome of key U.S.-China trade negotiations.
Brent crude futures for July delivery slipped 0.3% to $66.65 per barrel, while West Texas Intermediate (WTI) dropped 0.2% to $64.86 per barrel, both retreating after hitting highs not seen since April.
The oil market remained focused on the results of two days of U.S.-China trade talks held in London. Officials from both sides announced a preliminary framework to reinforce the Geneva trade truce. The agreement includes China easing export restrictions on rare-earth minerals and magnets, while the U.S. plans to roll back some tech-related export controls, including on semiconductors. U.S. Commerce Secretary Howard Lutnick said the deal adds substance to previous commitments, though implementation still awaits approval from Presidents Trump and Xi.
Optimism over reduced trade tensions supported global growth sentiment, helping buoy oil prices. However, concerns over weaker demand kept gains in check. The U.S. Energy Information Administration (EIA) trimmed its global oil demand forecast by 200,000 barrels per day to 103.5 million bpd, citing weaker consumption in developed nations. The agency also projected lower U.S. crude output in 2025 due to subdued drilling activity.
In contrast, OPEC+ continues to ramp up production, heightening oversupply worries. On the inventory front, U.S. crude stockpiles fell by 370,000 barrels last week, according to the American Petroleum Institute (API), defying expectations of a 700,000-barrel build. Investors now await the official EIA report for confirmation.
The mix of trade optimism, demand concerns, and inventory data is likely to keep oil markets volatile in the short term.