Brent in limbo amid demand hopes and supply glut fears

The front-month ICE Brent contract has inched $0.03/bbl lower on the day, to trade at $68.50/bbl at 09.00 GMT.

IMAGE: Large oil storage tanks. Getty Images

Upward pressure:

Brent crude’s price has gained some support due to demand growth expectations.

US crude oil inventories fell by 577,000 bbls in the week ending 18 July, according to estimates from the American Petroleum Institute (API).

A drop in US crude stocks typically indicates higher demand and can lend some support to Brent's price.

Besides, oil got a boost from the US-Japan trade deal that includes a reduction in tariffs, US President Donald Trump said on social media platform Truth Social.

Under the agreement, Japan's auto sector will see a tariff of 15%, down from a total of 27.5% levies earlier, according to a Reuters report. Duties on other Japanese goods that were scheduled to come into effect from 1 August will also be lowered to 15% from 25%.

As part of the deal, Japan has also agreed to invest $550 billion in the US, Trump said.

Downward pressure:

Expectations of a large oil surplus later this year are adding headwinds for the oil market, as OPEC+ members continue to hike production levels every month, according to market analysts.

Total crude oil production by OPEC+ members averaged 41.56 million b/d last month, about 349,000 b/d higher than in May.

“Our oil balance indicates that the oil market will be in a large surplus in 4Q25,” two analysts from ING Bank noted.

Brent’s price rise was also capped by concerns over worsening US-EU trade ties and Trump’s looming 1 August tariff deadline.

“EU and US negotiators are heading into another week of negotiations, while Trump has threatened to hit the bloc’s exports with 30% tariffs,” said ANZ Bank’s senior commodity strategist Daniel Hynes.

By Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online