Oil Dips As Trump Announces Tariff Breakthroughs And U.S. Stockpiles Rise

Meanwhile, Iran's oil exports surge as its citizens suffer power outages: File Image/Pixabay

Oil prices on Wednesday suffered a fourth straight session of losses, with U.S. president Donald Trump's tariffs as the main reason, as the brash billionaire announced a new trade deal with Japan and the European Union reported to be close to signing a deal as well.

Brent settled down 8 cents at $68.51 per barrel, while West Texas Intermediate settled down 6 cents at $65.25 per barrel.

Trump's deal with Japan will see the latter investing $550 billion in the U.S. in exchange for auto tariffs on Tokyo lowered to 15 percent from the current 25 percent.

Trump said Japan will also "open their country to trade including cars and trucks, rice and certain other agricultural products, and other things."

Japan and the U.S. were also concluding an additional deal involving liquefied natural gas.

Officials from the European Commission, which negotiates trade deals on behalf of the 27-nation European Union, reported that they too are nearing a deal that will result in a broad 15 percent tariff on EU goods imported into the U.S.; the rate could apply to sectors including cars and pharmaceuticals but not be added to long-standing U.S. duties, which average just under 5 percent.

Analytical reaction to the deals was tepid: Vandana Hari, founder of Vanda Insights, said, "The slide [in prices] of the past three sessions appears to have abated but I don't expect much of an upward impetus from news of the U.S.-Japan trade deal as the hurdles and delays being reported in talks with the EU and China will remain a drag on sentiment."

Meanwhile, the Energy Information Administration reported that inventory levels at Cushing, Oklahoma, the delivery point for WTI futures, rose to the highest since June, and distillate reserves increased for a second straight week; however, crude inventories fell and diesel stockpiles hovered at the lowest seasonal level since 1996.

Matt Smith, Americas lead oil analyst at Kpler, remarked, "Cushing is perhaps the most important takeaway, with more builds expected in the weeks ahead to carry it away from historic lows."

In other oil news on Wednesday, Iran's national power consumption repeatedly exceeded 70,000 megawatts in recent days during a heatwave, and media pointed out the irony of this causing widespread protest from the citizenry as the Iranian government's oil exports surged to nearly 1.9 million barrels per day in June.