Oil fell as the dollar strengthened and conviction waned that the US will reach agreements with key trade partners ahead of a deadline next week.
West Texas Intermediate crude slid more than 1% to settle near $65 a barrel after President Donald Trump said the US has a 50-50 chance of striking a trade deal with Europe, a contrast to the optimism the bloc’s diplomats expressed this week. Trump also said most tariff rates are essentially settled now. The effective US tariff rate is at the highest in a century, by some estimates, a potential threat to energy demand.
In another headwind, Trump indicated he had no plans to fire Federal Reserve Chair Jerome Powell, boosting the dollar and making the commodities priced in the currency less attractive.
Crude has remained in a holding pattern this month, but is down for the year as increased supply from OPEC+ adds to concerns of a looming glut. The group will next meet on Aug. 3 to decide on production levels. On Thursday, one member, Venezuela, was given a production reprieve by a US decision to let Chevron resume pumping oil in the country.
“We expect crude to slowly sell off this fall, driven by steady acceleration of stock builds, softening physical markets, reduced refinery margin support and continued deescalation of geopolitically driven supply risk,” Macquarie Group analysts including Vikas Dwivedi wrote in a note.
Oil Prices
WTI for September delivery fell 1.3% to settle at $65.16 a barrel.
Brent for September settlement slipped 1.1% to $68.44 a barrel.
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