Busy Trump No Match For Bearish Demand Expectations, Oil Dips Again

The double punch of China and bullish OPEC predictions didn't sway traders: File Image/Pixabay

Although U.S. president Donald Trump on Tuesday agreed to pause tariff implementation as trade negotiations continued with China, bearish oil traders were more swayed by upcoming data from the Energy Information Administration, with the expectation that gasoline demand would decline due to the end of the summer driving season.

As a result, oil prices dipped: Brent settled down 51 cents at $66.12 per barrel, and West Texas Intermediate settled down 79 cents at $63.17.

Post settlement, U.S. crude futures fell further when the American Petroleum Institute reported that U.S. crude inventories increased by 1.5 million barrels for the week ended Aug. 2, compared with a draw of 4.2 million barrels for the previous week.

The official government inventory report will be released on noon Wednesday.

Ironically given the negative mood, the Organization of the Petroleum Exporting Countries (OPEC) raised its forecasts for global oil consumption in 2026 while trimming expectations for supply growth from the U.S. and other non-OPEC producers.

OPEC in it latest monthly report stated that global oil demand would rise by 1.38 million barrels per day (bpd) next year, an increase of 100,000 bpd over the previous forecast.

Meanwhile, all analytical eyes were on the upcoming Friday meeting between Trump and Russian president Vladimir Putin, who are converging in Alaska to discuss the possibility of the former Soviet Union ending its war with Ukraine.

Commerzbank wrote in a report that if a ceasefire in Ukraine or even a peace agreement is agreed upon, Trump may suspend his tariffs against India for buying Russian oil; if the meeting proves to be a bust, sanctions could be imposed on other oil buyers, such as China.

For its part, Bloomberg was more concerned about fundamentals, and it wrote that "The aggregate trading volume of global benchmark Brent is well below its daily average — suggesting traders are exercising caution as they seek further insight into the oil market's outlook…...prices are down by more than 8 percent this month after trade and geopolitical tensions eased, while many analysts anticipate a supply glut later this year."