Xi and Trump concluded trade talks in South Korea. Oil prices were flat on Thursday after Trump announced he would reduce tariffs on China from 57% to 47% following his meeting with Xi Jinping. These signs that tensions affecting the global economic growth outlook are easing.
Brent crude futures, which rose 52 cents on Wednesday, fell 40 cents, or 0.46%, to $64.62 a barrel by 05:31 GMT. WTI crude futures fell 31 cents, or 0.51%, to $60.17 a barrel after rising 33 cents the previous day.
Trump agreed to reduce tariffs on China in a one-year deal in exchange for Beijing resuming U.S. soybean purchases, keeping rare earths exports flowing, and cracking down on the illicit trade of fentanyl.
This could boost market confidence to some extent, stimulate global energy demand, and provide support for oil prices.
The US Federal Reserve (Fed) also helped improve the economic outlook by cutting interest rates on Wednesday, in line with market expectations. However, it signaled that this could be the last rate cut of the year because the ongoing government shutdown threatens data availability.
The Fed’s decision underscores a broader shift in the policy cycle, favoring gradual reflation and support over containment, providing support for commodities sensitive to economic activity.
US crude oil and fuel inventories saw significant declines. Brent and WTI’s gains in the previous session also reflected a larger-than-expected decline in US crude and fuel inventories.
However, both indices are on track to decline by more than 3% in October, marking their third consecutive month of losses.
The US Energy Information Administration (EIA) reported that US crude inventories decreased by 6.86 million barrels to 416 million barrels in the week ending October 24. This figure falls short of analysts’ expectations for a 211,000-barrel drop.
Another key focus for investors is the OPEC+ meeting scheduled for November 2. At that meeting, the alliance is expected to announce another 137,000 barrels per day (bpd) of output increase for December.
The group has raised its production targets by a total of more than 2.7 million barrels per day (bpd)—about 2.5% of global supply—in a series of monthly increases since April. This is almost half the cumulative supply cuts of 5.85 million barrels the group agreed to in previous years.