Oil prices extended losses on Wednesday, continuing their slide from earlier in the week as concerns about oversupply and weakened demand weighed heavily on the market. U.S. crude oil futures settled at $58.07 per barrel, down $1.02 or 1.73%, while Brent crude futures settled at $61.12 per barrel, a decrease of $1.03 or 1.66%.
Both Brent and WTI crude benchmarks plunged to four-year lows earlier this week after OPEC+ decided to accelerate its production increases, raising concerns of an oversupplied market amid already fragile demand conditions driven by escalating U.S. tariffs. The combination of increased supply and deteriorating demand outlooks has amplified bearish sentiment in the oil market.
Markets are now eyeing a meeting between the U.S. and China in Switzerland, which could mark the first step toward easing trade tensions that have severely disrupted global economic activity. Tariffs between the two largest economies have surged to over 100% on many goods. However, analysts remain skeptical about any near-term breakthrough. “Unless the U.S. receives major trade concessions, further de-escalation seems unlikely,” said Thiago Duarte, market analyst at Axi.
Adding pressure, data from the U.S. Energy Information Administration (EIA) showed a surprise build in gasoline inventories last week, prompting fresh concerns about weakening demand just ahead of a key summer driving period. “This is the first bad report for gasoline in a couple of weeks,” said Bob Yawger, director of energy futures at Mizuho, citing a pullback in refinery utilization rates. In contrast, U.S. crude inventories fell by 2 million barrels to 438.4 million barrels, a larger draw than analysts’ expectations of an 833,000-barrel decrease.
Some support came from signals that U.S. oil producers may begin cutting capital expenditures, with suggestions that domestic output growth could have peaked. Additionally, geopolitical tensions continue to provide a risk premium, particularly as conflict between Israel and the Iran-backed Houthis in Yemen persists. According to PVM analyst Tamas Varga, market volatility is likely to continue amid the rapid shift in OPEC+ supply dynamics and the uncertain trajectory of U.S. trade and monetary policy. Investors are also watching for the Federal Reserve’s policy update on Wednesday, with rates expected to remain steady in the 4.25%-4.50% range until at least the July meeting.