Oil prices edged lower on Thursday after U.S. fuel inventories posted sharp gains and Saudi Arabia slashed its crude prices for Asia, signalling concerns over sluggish demand amid a fragile global economic outlook.
Brent crude futures dipped 14 cents, or 0.2%, to $64.72 per barrel by 05:00 GMT, while U.S. West Texas Intermediate (WTI) crude slipped 24 cents, or 0.4%, to $62.61.
The market’s downward move came after the U.S. Energy Information Administration (EIA) reported unexpectedly large increases in gasoline and distillate stockpiles. The build suggests American fuel demand, the world’s largest, is losing steam at the onset of summer, typically a peak consumption season.
“The surprise surge in U.S. stockpiles caught the market off guard,” said Tina Teng, an independent market analyst. “Simply put, a gloomy global economic trajectory dimmed the demand outlook.”
On Wednesday, oil benchmarks closed roughly 1% lower after data showed that U.S. gasoline inventories rose by 2.1 million barrels and distillate stocks jumped by 3.2 million barrels, far above analyst forecasts.
Meanwhile, Saudi Arabia, the world’s top oil exporter, announced it will cut official selling prices (OSPs) for July-loading crude bound for Asia, slashing prices to their lowest in two months.
According to pricing details reviewed by Reuters, the flagship Arab Light crude will be sold to Asian refiners at $1.80 per barrel above the Oman/Dubai benchmark, down 50 cents from June.
“While the cut was smaller than some feared, it confirms the kingdom’s unease over soft demand,” said analysts at ANZ Bank in a client note. “Especially troubling is that this comes right at the start of the summer driving season.”
The pricing shift comes just days after OPEC+, a coalition of the Organisation of the Petroleum Exporting Countries and allies like Russia, agreed to raise July output by 411,000 barrels per day. The move signals the group’s complex strategy to regain market share and pressure non-compliant members to stick to quotas.
Saudi Arabia and Russia, key OPEC+ leaders, are reportedly working to discipline over-producers while simultaneously keeping a firm grip on prices amid shifting global trade dynamics.
Adding further pressure, weak U.S. economic data and continued friction in U.S.-China trade relations have intensified fears of a global slowdown.
The U.S. services sector shrank in May for the first time in 11 months, while input prices continued to rise, raising red flags about persistent inflation and a fragile recovery.
“Markets are cautiously watching for any progress in trade talks between the world’s two top economies,” Teng added.
Comments by U.S. President Donald Trump on Wednesday cast doubt over those prospects. He called Chinese President Xi Jinping “extremely tough” and said he was “very hard to make a deal with,” underscoring tensions just as hopes were rising for a pivotal Xi-Trump phone call this week.
Beyond Asia, global supply chains also face mounting disruptions. The European Union reported signs of progress in its own trade talks with the U.S., while Canada prepared countermeasures in response to new American metal tariffs.
“Uncertainty fuelled by President Trump’s shifting stance on tariffs has intensified fears of a global economic slowdown,” said Ole Hansen, head of commodity strategy at Saxo Bank.
With oil demand closely tied to economic health, analysts warn that prices could remain under pressure until clearer signals of recovery or geopolitical resolution emerge.
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