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Oil Prices Dip Amid Rising Supply Concerns Despite US-China Trade Relief

Global crude oil markets saw a minor pullback on Tuesday, as concerns over increasing global supply weighed heavier than the positive sentiment stemming from the temporary pause in the U.S.-China trade war.

Crude Oil Market Update

Brent crude futures slipped by $0.22 (-0.3%) to trade at $64.74 per barrel, while U.S. West Texas Intermediate (WTI) crude fell $0.18 (-0.3%) to $61.77, according to early trading data.

Both benchmarks had surged over 1.5% on Monday, hitting their highest levels since April 28, following news of a 90-day tariff truce between the U.S. and China, the world’s two largest economies.

Supply Risks Overshadow Trade Optimism

Although the temporary easing in trade tensions sparked a brief rally in oil, investors are now turning their attention to global supply dynamics. Analysts from ING noted:

“While a thawing in trade tensions between China and the U.S. is helpful, there’s still plenty of uncertainty over what happens in 90 days. This uncertainty could continue to generate headwinds for oil demand.”

Underlying trade issues—such as the U.S. trade deficit with China and demands from President Trump regarding fentanyl regulation—remain unresolved, further clouding long-term stability.

OPEC+ Output Increase Raises Oversupply Fears

Adding to bearish sentiment, recent data suggests that OPEC+ members have increased output significantly since April. Projections show May production rising by 411,000 barrels per day, well above market expectations.

Analysts warned that if OPEC+ continues with aggressive supply hikes into May and June, oil markets could remain well supplied for the rest of 2025, limiting upward momentum for prices.

Mixed Sentiment on Crude Oil Inventories

Meanwhile, views on U.S. crude oil inventory trends remain mixed among analysts. Inventory data, expected later this week, will be closely watched for signs of demand resilience or stockpile growth, both of which could influence price direction in the near term.

📊 Market Outlook

Short-Term Bearish: Rising supplies and uncertain demand continue to weigh on prices.
Key Support Levels: Brent at $64.00, WTI at $61.50.
Next Watchpoint: U.S. crude inventory report and OPEC+ compliance levels.

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Yasher Rizwan