Oil Slips as Trade Optimism Fades,OPEC+Supply Decision Looms

Highlights:

• Brent crude slipped below US$69, while WTI remained above US$67, after a 3% rally earlier this week.
• Trade deal announcements, including one with Vietnam, offered a short-term boost, but concerns over tariffs continue to cloud oil demand.
• OPEC+ is set to meet this weekend, with markets anticipating a sizable increase in supply quotas for August.

Oil Prices Retreat After Strong Rally

Oil prices eased at the time of writing following their biggest single-day gain in nearly two weeks. Brent crude traded just under US$69 per barrel, while West Texas Intermediate (WTI) held above US$67, retreating after a 3% surge on Wednesday.

Trade Talks and Tariff Uncertainty Weigh on Sentiment

The market had initially rallied on news that U.S. President Donald Trump had reached a trade agreement with Vietnam, marking the third such deal ahead of a critical July 9 deadline. However, traders remain cautious as trade discussions with other key partners continue, and uncertainty around tariffs threatens to dampen oil demand.

Eyes on OPEC+ Meeting and US Holiday Volatility

Attention now turns to the upcoming OPEC+ meeting on Sunday, where the group is widely expected to announce a substantial increase in supply quotas for August. Analysts suggest that while recent trade optimism has supported prices, this momentum may not hold.

“While trade optimism provided a boost to oil prices, the sustainability of this move will likely be short-lived,” said Warren Patterson, Head of Commodities Strategy at ING. He noted that markets will likely remain conservative ahead of the US long weekend and OPEC+’s output decision.

Volatility Slows Ahead of Market-Driving Events

Despite sharp price movements in recent weeks due to geopolitical tensions in the Middle East, oil volatility and trading volumes have begun to moderate. Investors are increasingly focused on upcoming supply decisions and trade policy clarity that could shape oil’s near-term trajectory.

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