Oil edges down amid bearish Trump tariff outlook
Brent crude futures were down 23 cents, or 0.3%, at $69.96 a barrel by 0904 GMT. US West Texas Intermediate crude fell 32 cents, or 0.5%, to $68.06 a barrel.
On Wednesday, Trump threatened Brazil, Latin America's largest economy, with a punitive 50% tariff on exports to the US after a public spat with his Brazilian counterpart Luiz Inacio Lula da Silva.
He also announced plans for tariffs on copper, semiconductors, and pharmaceuticals, and his administration sent tariff letters to the Philippines, Iraq, and others. These were in addition to more than a dozen letters issued earlier in the week, including to key US suppliers South Korea and Japan.
Trump's history of backpedaling on tariffs has made markets less reactive to such announcements, said Harry Tchilinguirian, group head of research at Onyx Capital Group.
"People are largely in wait-and-see mode, given the erratic nature of policymaking and the flexibility the administration is showing around tariffs," Tchilinguirian said.
Policymakers remain concerned about inflationary pressures from the tariffs. Minutes from the Federal Reserve's June 17–18 meeting showed that only "a couple" of officials believed interest rates could be reduced as soon as this month.
Higher interest rates increase borrowing costs and reduce demand for oil.
However, a weaker US dollar during Thursday's Asia trading session helped support oil prices, according to OANDA senior analyst Kelvin Wong. A weaker dollar typically lifts oil prices by making them cheaper for holders of other currencies.
US crude stocks rose, while gasoline and distillate inventories fell last week, the Energy Information Administration reported Wednesday. Gasoline demand rose 6% to 9.2 million barrels per day last week, the EIA said.
Global daily flights averaged 107,600 during the first eight days of July, an all-time high. Flights in China reached a five-month peak, and port and freight activity showed "sustained expansion" in trade from last year, according to a JP Morgan client note.
"Year to date, global oil demand growth is averaging 0.97 million barrels per day, in line with our forecast of 1 million barrels per day," the note said.
There is also skepticism that the recent increase in production quotas announced by OPEC+ will result in a real rise in output. Some members are already exceeding their quotas, while others, such as Russia, cannot meet targets due to damaged oil infrastructure, said Tony Sycamore, an analyst at IG.
OPEC+ oil producers are set to approve another major output boost for September as they complete both the unwinding of voluntary production cuts by eight members and the United Arab Emirates' move to a larger quota.— Reuters
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