Oil prices edged lower during Asian trading on Tuesday as concerns over rising global supply levels outweighed the positive sentiment from a temporary tariff pause between the United States and China.
As of 3:00 pm AEST (5:00 am GMT), Brent crude futures slipped by $0.12, or 0.2%, to $64.84 per barrel, while US West Texas Intermediate (WTI) crude dropped $0.11, or 0.1%, to $61.87.
Both crude benchmarks had rallied around 1.5% on Monday, closing at their highest levels since April 28.
The upswing followed the announcement that the U.S. and China would reduce tariffs for at least 90 days, easing market tensions and providing a temporary lift to equities, the U.S. dollar, and oil prices.
However, traders remained cautious, with structural issues behind the trade dispute still unresolved. The U.S. continues to press China on its trade surplus and demands more substantial efforts to combat the fentanyl crisis.
ANZ analysts commented: “The de-escalation is also likely to see investors trim their extreme bearish stance; although they are likely to remain net short as there remains some risk that an agreement between the U.S. and China will not be reached.”
Concerns around surging global supply also weighed on sentiment. The Organisation of the Petroleum Exporting Countries (OPEC) has reportedly increased output more than expected, with May production likely rising by 411,000 barrels per day compared to April.
