Oil Prices Drop as Trade Uncertainty Offsets Bullish Supply Signals
Oil prices edged lower for a fourth straight session on Wednesday, pressured by geopolitical trade tensions and technical selling, even as traders anticipated bullish U.S. inventory data. The market struggled for direction, balancing global supply threats against fragile risk sentiment tied to U.S. and EU trade negotiations.
Trade Tensions with EU, China Weigh on Crude Market Confidence
Brent crude futures slipped 50 cents, or 0.7%, to $68.09 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped 47 cents to $64.84 as of mid-day London trading. Prices had already lost about 1% on Tuesday after the European Commission proposed potential tariffs on $109 billion worth of U.S. goods.
Although U.S. President Trump announced a 15% tariff agreement on Japanese imports, analysts suggest it offered limited upside.
“The slide appears to have abated but I don’t expect much upward impetus from the U.S.-Japan trade deal,” said Vandana Hari of Vanda Insights. Ongoing hurdles in EU and China negotiations continue to dampen sentiment.
U.S. Crude Inventories and Technical Levels In Focus
The market awaits the Energy Information Administration’s (EIA) weekly data, due Wednesday, with consensus expecting a 1.4 million-barrel draw.
The American Petroleum Institute (API) reported a modest 577,000-barrel decline, a stark contrast to the previous week’s massive 19.1 million-barrel build.
Gasoline stocks declined by 1.2 million barrels, while distillates rose by 3.48 million barrels—adding mixed signals ahead of the official report.
From a technical perspective, WTI futures are trending below a key long-term pivot at $65.38. This places prices within striking distance of support levels at the 200-day moving average of $64.08 and the 50-day at $63.50. A break below the June 24 bottom at $62.69 could trigger accelerated selling. Traders are unlikely to re-enter the long side until WTI reclaims the $65.38 pivot.
Physical Supply Outlook Steadies on Azerbaijan, Russia Developments
Physical crude supply received support after loadings of Azeri BTC resumed at the Turkish port of Ceyhan following contamination-related delays.
Meanwhile, U.S. Energy Secretary Granholm signaled Washington may consider sanctions on Russian oil—a potential long-term bullish tailwind if executed.
The EU’s recent 18th sanctions package also lowered the Russian crude price cap, further tightening outlook for Moscow’s oil flows.
Bearish Near-Term Bias as Sentiment Dominates Fundamentals
While supply risks persist in the background, ongoing trade uncertainty and failure to hold technical support levels are weighing on crude.
With WTI stuck below key pivots and sentiment cautious ahead of confirmed inventory draws, the short-term oil prices forecast remains bearish.
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