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Oil prices fell in Asian trade on Thursday, extending losses from the previous session as rising U.S. gasoline and distillate inventories raised fresh concerns about fuel demand, while a price cut from top exporter Saudi Arabia signaled potential softness in global consumption.
At 23:14 ET (03:14 GMT), Brent crude futures for August delivery were down 0.2% at $64.75 per barrel, while West Texas Intermediate (WTI) crude dropped 0.2% to $61.74 a barrel.
U.S. Inventories Mixed: Crude Draw, Fuel Build
The U.S. Energy Information Administration (EIA) reported a larger-than-expected draw of 4.3 million barrels in crude inventories last week, suggesting strong underlying demand or tightening supply. However, the bullish data was overshadowed by a surge in refined product stockpiles:
- Gasoline inventories rose by 5.2 million barrels, sharply exceeding expectations.
- Distillate inventories, which include diesel and heating oil, climbed 4.2 million barrels, also well above forecasts.
The buildup in fuel supplies comes ahead of the summer driving season, raising concerns that consumer demand may be underperforming, especially in light of softening labor market indicators. A weaker-than-expected private payrolls report earlier in the week reinforced fears of slowing economic momentum in the world’s largest oil consumer.
Trade Policy Uncertainty Weighs on Sentiment
Oil markets remain cautious amid ongoing ambiguity surrounding U.S. trade policy. President Donald Trump’s move to double tariffs on steel and aluminum imports to 50%, and the passing of a deadline for global trading partners to submit their “best offers” without any new agreements, have further clouded the outlook for global trade and energy demand.
These developments have injected volatility into financial and commodity markets, as investors weigh the inflationary risks and broader economic fallout from potential tariff escalations.
Saudi Arabia Cuts July Oil Prices for Asia
Adding to the downside pressure, Saudi Arabia slashed its July selling prices for Asian buyers to a two-month low, according to a Reuters report. The decision comes just days after the latest OPEC+ meeting, where the cartel agreed to maintain modest production increases in July, in line with trends from previous months.
The price cut from Riyadh signals that demand conditions in Asia—home to the largest pool of oil importers—remain subdued. Analysts also noted that the move may be aimed at disciplining overproduction by other OPEC members and defending Saudi Arabia’s market share in a competitive global market.
Geopolitical Risks Provide Limited Support
Despite recent gains driven by escalating military tensions between Russia and Ukraine and growing signs of a breakdown in U.S.-Iran nuclear talks, oil prices are now struggling to maintain upward momentum amid deteriorating demand signals and renewed pricing competition.
Market participants are also betting that geopolitical instability could still lead to tighter global oil supplies in 2025, though near-term sentiment is being dictated by inventory trends and economic data.
Outlook
With traders now turning their focus to Friday’s U.S. nonfarm payrolls report, the health of the American labor market could be a key determinant for near-term oil price direction. A stronger-than-expected print may restore some confidence in demand resilience, while another downside surprise could deepen fears of an economic slowdown—and with it, softer energy consumption.
