LONDON: Oil prices retreated on Tuesday, having climbed almost 2 percent in the previous session, as investors assessed the latest developments on US tariffs and a higher than expected increase to OPEC+ output for August.
Brent crude futures were down 10 cents, or about 0.1 percent, to $69.48 a barrel at 3:20 p.m. Saudi time. US West Texas Intermediate crude were down 21 cents, or about 0.3 percent, to $67.72.
US President Donald Trump began telling trade partners on Monday that sharply higher US tariffs will start on Aug. 1, though he later said that deadline was not 100 percent firm.
Trump’s tariffs have raised uncertainty across the market and concerns that they could have a negative effect on the global economy and oil demand. Powerhouse Asian economies Japan and South Korea said on Tuesday they would try to negotiate with the US to soften the tariffs’ impact.
While prices seem to be pressured by OPEC+ unwinding its voluntary output cuts, tightness in middle distillates and Houthi attacks on cargo ships are supporting the market, said Rystad analyst Janiv Shah.
On Saturday, the OPEC+ group comprising the Organization of the Petroleum Exporting Countries and its allies agreed to raise production by 548,000 barrels per day (bpd) in August, exceeding the 411,000 bpd increases in the previous three months.
Investors were bullish heading into the peak summer demand period in the US, however, with data from the US Commodity Futures Trading Commission on Monday showing money managers raised their net-long futures and options positions in crude oil contracts in the week to July 1.
Once oil demand declines seasonally, the increase in OPEC+ exports will hit the market, raising downside risks to prices, HSBC analysts said in a note.
Analysts at Commerzbank expect the price of Brent to fall to $65 a barrel on the emerging oversupply in the autumn months.
The decision by OPEC+ removes nearly all of the 2.2 million bpd of voluntary cuts made by the group since 2023.
The producer group is set to approve an increase of about 550,000 bpd for September when it meets on Aug. 3, sources told Reuters, which would unwind all of the cuts.
