Crude Oil Prices Fall as U.S. Fuel Demand Slows and Saudi Arabia Cuts July Rates for Asia

Oil prices continued to fall in Asian markets on June 05 due to rising concerns about weak fuel demand in the U.S. and a price cut announced by Saudi Arabia. The dip follows earlier losses after U.S. inventory data showed a large increase in fuel stockpiles, even as crude oil supplies dropped.

U.S. Fuel Stockpiles Rise Despite Crude Inventory Drop

Latest U.S. government data showed a sharp decline in crude oil inventories—by about 4.3 million barrels, more than expected. However, gasoline stocks rose by 5.2 million barrels, and distillate inventories increased by 4.2 million barrels, both higher than market forecasts.

This unexpected build in fuel reserves has raised concerns about weakening fuel demand in the U.S., especially just before the busy summer travel season.

U.S. Job Data Adds to Worries

Adding to these concerns, recent labor data showed fewer job additions, suggesting the U.S. economy might be cooling. The softer job market could result in lower fuel consumption, impacting oil demand further. Investors are also waiting for the official May jobs report, expected on Friday, for more clarity.

Brent and WTI Prices Edge Lower

In early Thursday trading:

• Brent crude for August delivery fell by 0.2% to $64.75 per barrel
• West Texas Intermediate (WTI) dropped 0.2% to $61.74 per barrel

These losses follow a more than 1% drop in the previous session, despite geopolitical tensions and speculation that oil supply may tighten in 2025 due to global conflicts and failed nuclear talks.

Saudi Arabia Cuts July Oil Prices for Asia

Top oil exporter Saudi Arabia lowered its July oil prices for Asian buyers to a 2-month low, indicating it sees weak demand ahead.

This price cut comes just after OPEC+ decided to raise oil output in July, continuing a trend from previous months. While the production hike caused a temporary uptick in prices, it also triggered concerns about a possible oversupply in the market.

Reports suggest Saudi Arabia is aiming to pressure other OPEC+ members who are overproducing, and gain a larger market share by lowering prices.

Trade Policy Uncertainty Adds to Market Jitters

Global markets also remain cautious amid uncertainty over U.S. trade policy, especially after President Trump doubled tariffs on steel and aluminum. A deadline for new trade offers passed without any agreements, adding further tension to global markets.

Read More, Government Reduces Import Duty on Crude Edible Oils to 10%. 

Conclusion

Oil prices are under pressure due to a mix of factors: rising U.S. fuel stockpiles, slowing labor market data, Saudi Arabia’s price cut for Asian buyers, and ongoing trade tensions. While some geopolitical issues may tighten supply, demand worries continue to weigh heavily on the market. Investors are now watching for key U.S. job data and OPEC+ decisions to get a clearer view of oil’s future direction.

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