Oil prices edged lower on Thursday as traders assessed a tentative easing of trade tensions between the United States and China alongside supportive signals from U.S. inventories and monetary policy.
Brent crude futures were down 53 cents, or 0.82%, at $64.39 a barrel by 0908 GMT, while U.S. West Texas Intermediate (WTI) fell 46 cents, or 0.76%, to $60.02.
The pullback followed gains in the previous session and came after President Donald Trump agreed to reduce tariffs on Chinese goods to 47% from 57% for one year, following talks with President Xi Jinping in South Korea. In return, Beijing is set to resume purchases of U.S. soybeans, maintain exports of rare earths, and step up action against illicit fentanyl trafficking. Market participants characterised the arrangement as a de-escalation rather than a fundamental reset of the bilateral relationship.
Analysts said the price softness sat uncomfortably alongside constructive inventory data. U.S. crude stocks fell by 6.86 million barrels to 416 million barrels in the week to 24 October, according to the Energy Information Administration, a sharper draw than the 211,000-barrel decline expected in a Reuters poll. Product inventories also declined, pointing to firmer refinery runs and demand into late October, even as headline prices remained under pressure.
Monetary policy added a further dimension. The U.S. Federal Reserve cut interest rates on Wednesday in line with expectations, but indicated the reduction might be the last of the year. The central bank also flagged the risk that the ongoing federal government shutdown could hamper the availability of key data. For commodities, a lower rate environment typically supports risk appetite and growth-sensitive assets, though the Fed’s signal of a possible pause tempered that effect.
Despite the inventory draw and the Fed move, both Brent and WTI remain on course for monthly declines of more than 3% in October, marking a third straight month of losses. Concerns about oversupply have persisted through the quarter, with non-OPEC production resilience and uneven demand indicators offsetting periodic disruptions. The latest dip suggests traders are reserving judgement on whether the tariff truce will translate into a measurable improvement in macro sentiment and trade flows.
Attention is now turning to supply policy. The OPEC+ alliance is scheduled to meet on 2 November and is expected to confirm an additional supply increase of about 137,000 barrels per day for December under its existing plan. Any deviation from that guidance, or fresh commentary on 2026 strategy, will be scrutinised for signals on how the group intends to balance seasonal demand softness against efforts to defend market share.
From a positioning standpoint, the headline-driven nature of recent sessions has encouraged short-term trading rather than longer-horizon allocations. The immediate question for the market is whether the U.S.–China arrangement will bolster industrial activity and energy demand through year-end. The commitments on agricultural purchases and critical materials may offer targeted support, but broader metrics—freight, manufacturing surveys and mobility trends—will determine whether the demand outlook improves materially.
Price spreads offered a mixed picture. While prompt differentials have been sensitive to inventory swings on the U.S. Gulf Coast, forward curves continue to reflect expectations of comfortable supply into the winter. Refining margins have narrowed from early-October levels, particularly for middle distillates, easing the incentive for some runs and contributing to volatility in crude offtake.
For now, the balance of factors—trade détente headlines, a supportive but possibly paused Fed, a sizeable U.S. stock draw, and a prospective OPEC+ supply addition—leaves crude range-bound with a modest downside bias. Traders will look to the OPEC+ meeting outcome on 2 November, the next weekly U.S. stock data, and any further details on the tariff timetable for clearer direction.
In the near term, clarity on implementation of the tariff reductions and the durability of Chinese commodity purchases will be central to sentiment. If the inventory trend in the United States continues and product demand holds into November, downside may be limited. Conversely, confirmation of the OPEC+ December increase without offsetting demand signals could keep rallies in check.
