Oil Market: Brent, WTI Futures Dip After Rally As Trump Tariff Tensions Back In Play

Oil prices eased during early trading on Tuesday after gaining in the previous session as investors assessed new deadlines set by the Trump administration regarding tariffs.

Benchmark Brent crude fell 0.5% at $69.27 per barrel, while U.S. West Texas Intermediate (WTI) crude declined 0.6% at $67.52 per barrel. Both benchmarks gained over 1% on Monday, driven by optimism about oil demand in the U.S. and Asia following Saudi Arabia's price hike for its benchmark crude.

On Monday, several key trading partners of the U.S., including Japan and South Korea, received letters from Trump that mentioned new tariff rates that would take effect on Aug. 1. While Trump warned countries against imposing reciprocal tariffs on U.S. goods, he kept the door open for negotiations.

"I would say firm, but not 100% firm. If they call up and they say we'd like to do something a different way, we're going to be open to that," Trump said when asked whether the deadline was firm. The U.S. President had first imposed reciprocal tariffs on April 2, which were paused a week later to allow for trade talks.

Retail sentiment on Stocktwits about the United States Oil Fund (USO) was in the ‘extremely bearish’ territory.

Trump’s tariffs have increased the risk of recession globally and have continued to put downward pressure on oil prices this year. However, the oil producer group OPEC+ has still moved to bring back some of the curtailed production capacity, with hopes of resilient global demand growth.

A record number of Americans took their vehicles on the road during the Independence Day holiday, contributing to a large drawdown of fuel inventories in the world’s top oil consumer.  

The United States Oil Fund has gained 2.2% this year, compared with 5.9% gains in the SPDR S&P 500 ETF (SPY).

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