Oil prices edged lower on Wednesday as concerns over a weakening global demand outlook outweighed market optimism from a temporary easing in U.S.-China trade tensions. The decline followed a reported increase in U.S. crude inventories and continued uncertainty over China’s import trajectory.
International benchmark Brent crude fell by 0.13% to $66.16 per barrel, while U.S. West Texas Intermediate (WTI) dropped 0.2% to $63.09 per barrel, compared to its previous close of $63.22.
The losses came after the American Petroleum Institute (API) reported a 4.3 million-barrel increase in U.S. crude stocks for the week ending May 9, signaling weaker demand in the world’s largest oil consumer. Investors await official data from the U.S. Energy Information Administration (EIA) later today for confirmation.
The bearish momentum followed a weekend breakthrough in trade talks between Washington and Beijing, where both sides agreed to temporarily lower tariffs. Starting May 14, the U.S. will reduce tariffs on Chinese goods from 145% to 30% for 90 days, while China will cut tariffs on U.S. goods from 125% to 10%.
U.S. President Donald Trump hailed the Geneva talks as a “fresh start,” claiming China has agreed to remove all non-monetary trade barriers. He also pointed to falling inflation and gasoline prices as signs of economic progress, renewing calls for the Federal Reserve to cut interest rates to stimulate growth.
Despite Trump’s optimistic tone, Fitch Ratings warned that the truce is temporary and not a resolution of the trade war, which continues to weigh on market sentiment and limit any sustained gains in oil prices.
Trump also announced a $600 billion investment pledge from Saudi Arabia over the next four years, aimed at boosting U.S. infrastructure and energy partnerships. Saudi Investment Minister Khalid Al-Falih confirmed the plan during Trump’s first Middle East tour of his second term, which includes visits to Qatar and the UAE.
On the supply side, OPEC’s latest monthly report showed a modest decline in production. Total OPEC crude output fell by 62,000 barrels per day (bpd) in March to 26.71 million bpd, with Venezuela accounting for the largest drop of 34,000 bpd to 888,000 bpd. Saudi Arabia recorded the highest increase, adding 49,000 bpd to reach 9.01 million bpd.
Meanwhile, combined output from OPEC+ producers — including non-OPEC allies — declined by 106,000 bpd to 40.91 million bpd in March.
OPEC also revised down its 2025 global oil demand growth forecast, projecting a rise of 1.3 million bpd to 105 million bpd. Demand growth in OECD countries is expected to be marginal, at just 100,000 bpd, while non-OECD demand is projected to rise by 1.19 million bpd.
Despite recent trade and investment developments, analysts say short-term oil prices remain constrained by broader supply-demand imbalances and lingering geopolitical uncertainties.
