Oil Regains Ground after 2% Drop

FILE PHOTO: The Phillips 66 Carson refinery is shown after the company said it will shut its large Los Angeles-area oil refinery late next year, delivering a blow to California's fuel supply, in Carson, California, US, October 17, 2024. REUTERS/Mike Blake/File Photo

Oil prices recovered some losses on Thursday after falling nearly 2% in the previous session, with investors weighing a potential OPEC+ output increase against conflicting tariff signals from the White House and ongoing US-Iran nuclear talks.
Brent crude futures were up 53 cents, or 0.8%, to $66.65 a barrel at 0706 GMT, while US West Texas Intermediate crude was up 55 cents, or 0.88%, to $62.82 a barrel.
Prices had settled down 2% in the previous trading session after Reuters reported that several OPEC+ members would suggest the group accelerate oil output increases for a second month in June, citing three sources familiar with the OPEC+ talks.
Signs that the US and China could be moving closer to trade talks supported prices. The Wall Street Journal reported that the White House would be willing to lower its tariffs on China to as low as 50% in order to open up negotiations.
US Treasury Secretary Scott Bessent said on Wednesday that current import tariffs - of 145% on Chinese products headed into the US and 125% on US products headed into China - were not sustainable and would have to come down before trade talks between the two sides could begin. White House Press Secretary Karoline Leavitt later told Fox News, however, that there would be no unilateral reduction in tariffs on goods from China.
Rystad Energy analysts say a prolonged US-China trade war could cut China's oil demand growth in half this year to 90,000 barrels per day from 180,000 bpd.
Trump is also mulling tariff exemptions on car part imports from China, the Financial Times reported on Wednesday.
Potentially putting downward pressure on oil prices, the US and Iran will hold a third round of talks this weekend on a possible deal to reimpose restraints on Tehran's uranium enrichment program. The market is watching the talks for any sign that a US-Iran rapprochement could lead to the easing of sanctions on Iranian oil and boost supply.
But the US on Tuesday put fresh sanctions on Iran's energy sector, which Iran's foreign ministry spokesperson said showed a "lack of goodwill and seriousness" over dialogue with Tehran.