The U.S. oil market outlook grew cautious on Thursday as prices pulled back after a strong gain the day before. Brent crude fell 45 cents, settling at $68.66 per barrel, while West Texas Intermediate dropped 44 cents to $67.01. Investors are growing concerned that U.S. tariffs may increase again, potentially slowing fuel demand.
This cautious tone follows Wednesday’s 3% rally, driven by geopolitical tensions and trade progress. Iran’s halt of cooperation with the U.N. nuclear watchdog raised fears of renewed conflict in the Middle East. Meanwhile, the U.S. and Vietnam reached a preliminary trade deal, which initially boosted market confidence.
Despite these factors, uncertainty over U.S. trade policy remains. The current 90-day pause on higher tariffs expires on July 9. Without new agreements with major partners like the European Union and Japan, higher tariffs could return. This looming risk pressures the U.S. oil market outlook as traders brace for possible demand reductions.
In addition, OPEC and its allies, known as OPEC+, plan to raise output by 411,000 barrels per day. The announcement is expected at their upcoming meeting. This supply increase adds to market concerns about balancing demand and production.
Compounding worries, a private-sector survey showed China’s service activity expanded at its slowest rate in nine months during June. As the world’s largest oil importer, slower growth in China affects global demand forecasts. Furthermore, U.S. crude inventories surprised analysts with a 3.8 million barrel build last week, intensifying doubts about fuel consumption.
Gasoline demand also weakened, dropping to 8.6 million barrels per day. This decline raises questions about demand during the peak U.S. summer driving season, usually a period of strong consumption.
Looking ahead, markets will closely watch the upcoming U.S. monthly employment report. This data could influence Federal Reserve interest rate decisions. Lower rates often stimulate economic activity, potentially boosting oil demand.
Overall, the U.S. oil market outlook remains cautious. Tariff uncertainties, increased supply from OPEC+, and weaker demand signals keep investors on edge. Market participants are likely to remain careful as these factors evolve in the coming weeks.
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