Oil prices steadied on Thursday after a sharp decline of over 1% in the previous session, driven by a significant buildup in U.S. gasoline and diesel inventories and Saudi Arabia’s decision to slash July crude prices for Asian markets.
Brent crude futures rose 23 cents, or 0.35%, to $65.09 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 16 cents, or 0.25%, to $63.01 per barrel by 1148 GMT.
The price drop on Wednesday was triggered by U.S. Energy Information Administration data revealing larger-than-expected increases in U.S. gasoline and distillate stockpiles, signaling weaker demand in the world’s largest economy.
This development raised concerns about oversupply, particularly as OPEC+ plans to ramp up production by 411,000 barrels per day (bpd) in July.
PVM analyst Tamas Varga noted that geopolitical tensions and wildfires in Canada, which threaten oil production, are providing some price support. However, Saudi Arabia’s move to cut July crude prices for Asia to near two-month lows has added downward pressure.
The price reduction follows OPEC+’s decision to increase output, with Saudi Arabia, the group’s de facto leader, potentially unwinding 2.2 million bpd of voluntary cuts between June and October to regain market share.
Global oil demand remains uncertain, influenced by ongoing U.S. trade negotiations with key partners, Varga added. Tensions between Washington and Beijing intensified after U.S. President Donald Trump described Chinese President Xi Jinping as “extremely hard to make a deal with” on Wednesday, highlighting trade frictions that could impact energy markets.
Investor attention is also focused on upcoming U.S. economic indicators, such as payroll data, which could influence the Federal Reserve’s interest rate decisions. UBS analyst Giovanni Staunovo emphasized that geopolitical developments in the Middle East will continue to be a critical factor for oil markets.
Meanwhile, Wednesday’s data showed the U.S. services sector contracting in May for the first time in nearly a year, further clouding the demand outlook.
WHAT YOU SHOULD KNOW
Oil prices stabilized on June 5, 2025, with Brent crude at $65.09 and WTI at $63.01 per barrel, following a over 1% drop driven by a significant U.S. gasoline and diesel inventory build, signaling weaker demand.
