Oil prices soften in early Wednesday trading across Asia as global markets react to recent developments in US-China trade talks. Investors also responded to weak oil demand from China and rising production among OPEC+ member nations.
Brent crude futures dropped 19 cents, or 0.3%, to reach $66.68 per barrel. Similarly, US West Texas Intermediate (WTI) crude declined 16 cents, or 0.3%, to $64.82 as of early morning trading.
Although US and Chinese officials reached a framework deal, the outcome still awaits final approval by President Donald Trump. US Commerce Secretary Howard Lutnick confirmed this progress after two days of intense negotiations in London. The agreement includes steps to resolve China’s export restrictions on rare earth minerals and magnets.
However, traders remain cautious as they await the official White House response. “These price moves reflect a combination of profit-taking and caution ahead of the formal US-China announcement,” explained Phillip Nova market analyst Priyanka Sachdeva.
Tony Sycamore, a market expert at IG, said, “This deal reduces downside risks for the Chinese economy. It also offers support for oil demand and prices.”
Meanwhile, supply-side developments are putting further pressure on the oil market. OPEC+ plans to boost production by 411,000 barrels per day in July. This increase would mark the fourth consecutive month of supply expansion. Yet, analysts warn that regional demand may not absorb the added output.
Capital Economics economist Hamad Hussain noted, “Rising oil demand within OPEC+ nations, especially Saudi Arabia, may offset increased supply. But this demand surge appears seasonal. Therefore, we still expect Brent crude to decline to $60 per barrel by year-end.”
Market attention is also turning toward US oil inventory data. On Tuesday, the American Petroleum Institute (API) reported that crude stocks fell by 370,000 barrels last week. Analysts surveyed by Reuters on Monday anticipated a larger decline of 2 million barrels for the same period.
They also predicted that gasoline and distillate inventories likely increased. The Energy Information Administration (EIA), the US Department of Energy’s statistics arm, will release official data later on Wednesday. This report could further influence short-term oil price movements.
As uncertainty lingers over trade and output, investors remain watchful. Nevertheless, analysts believe the outcome of these global events will determine whether oil prices soften further or stabilize.