Oil prices fell by over 1 per cent on Thursday as investors weighed the potential effects of a US court ruling that blocked President Donald Trump’s tariffs, with Brent crude losing 75 cents or 1.2 per cent to finish at $64.15 per barrel and the US West Texas Intermediate (WTI) crude declining by 90 cents or 1.5 per cent to $60.94 a barrel.
A US trade court blocked most of President Donald Trump’s tariffs in a sweeping ruling on Wednesday that found the president overstepped his authority by imposing across-the-board duties on imports from US trading partners.
The Court of International Trade said the US Constitution gives Congress exclusive authority to regulate commerce with other countries that is not overridden by the president’s emergency powers to safeguard the US economy.
However, the court was not asked to address some industry-specific tariffs President Trump has issued on automobiles, steel and aluminium using a different statute.
Meanwhile, the International Energy Agency (IEA) Executive Director Fatih Birol explained that demand for oil was considerably weak in China.
He added that developments in Russia and Iran were “question marks” for oil prices.
The US and Iran are holding talks meant to halt Iranian nuclear activities that have rapidly accelerated since President Trump removed the US out of a 2015 deal between Iran and major powers that strictly limited those activities.
On the oil supply front, the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, could agree on Saturday, May 31, to accelerate oil production hikes in July.
Market analysts say the group may likely agree on another large supply increase of 411,000 barrels per day.
“We expect similar increases through until the end of the third quarter, as the group increases its focus on defending market share,” Reuters cited ING analysts.
However, there are also concerns about potential new sanctions on Russian crude.
Adding to supply risks, US oil giant, Chevron has terminated its oil production and a number of other activities in Venezuela, after its key license was revoked by the Trump administration in March.
Last month, the South American OPEC producer cancelled cargoes scheduled to Chevron, citing payment uncertainties related to US sanctions.
This may impact the 290,000 barrels per day of Venezuelan oil, or over a third of the country’s total that Chevron was exporting before that.
The Energy Information Administration (EIA)data showed U.S. crude inventories posted a surprise draw in the latest week, falling by 2.8 million barrels to 440.4 million barrels. Analysts had expected a 118,000-barrel rise.
In Canada, a wildfire in the province of Alberta has forced residents of a small town to evacuate and prompted a temporary shutdown of some oil and gas production, which could reduce supply.