Oil prices retreated Wednesday despite hovering near two-week highs, as an expected increase in US crude inventories tempered market optimism fueled by a temporary easing of trade tensions between the United States and China.
International benchmark Brent crude decreased by around 0.13%, trading at $66.16 per barrel at 10.52 a.m. local time (0752 GMT), down from $66.25 at the previous session's close.
The US Benchmark West Texas Intermediate decreased by about 0.2%, settling at $63.09 per barrel, compared to its prior session close of $63.22.
Both benchmarks fell after data from the American Petroleum Institute (API) showed US crude inventories rose by 4.3 million barrels for the week ending May 9, signaling weaker demand in the world鈥檚 top oil consumer and putting downward pressure on prices. Official inventory data from the US Energy Information Administration (EIA) is due later in the day.
The fall in prices followed a weekend agreement between Washington and Beijing to temporarily lower reciprocal tariffs, reached during trade negotiations held in Switzerland. Under the agreement, set to take effect May 14, the US will reduce tariffs on Chinese goods from 145% to 30% for 90 days, while China will cut tariffs on American goods from 125% to 10%.
US President Donald Trump hailed the deal in a White House press conference, describing the Geneva talks as a 鈥渇resh start鈥� with Beijing. He added that China had agreed to suspend and ultimately remove all non-monetary trade barriers.
Trump鈥檚 recent social media posts highlighting falling inflation and lower gasoline prices also influenced sentiment in energy markets, shaping expectations for future oil demand. He reiterated his call for the Federal Reserve to cut interest rates to further boost the economy.
Despite these upbeat statements, Fitch Ratings warned that the tariff truce should not be interpreted as the end of the US-China trade war, suggesting lingering uncertainty may continue to weigh on investor risk appetite and cap oil price gains.
While Trump鈥檚 announcements, including a $600 billion investment pledge from Saudi Arabia, raised hopes for stronger US economic growth and higher energy demand, analysts said the short-term impact on oil prices remains limited due to broader supply-demand dynamics.
Saudi Investment Minister Khalid Al-Falih said in his opening speech that Saudi Arabia plans to invest $600 billion in the US over the next four years.
Trump's visit to Saudi Arabia is his first Middle East tour since his second term began on January 20. The tour, which runs from Tuesday to Friday, includes stops in Qatar and the United Arab Emirates (UAE).
Market watchers are also closely monitoring the Organization of the Petroleum Exporting Countries' (OPEC) Monthly Oil Market Report, scheduled for release today.
By Handan Kazanci
Anadolu Agency