Oil prices fell about 1% on Wednesday (July 16), as signs of rising Chinese crude consumption were offset by investor caution about the broader economic impact of U.S. tariffs.

Prices have fluctuated within a tight range, as signs of steady demand from increased travel during the Northern Hemisphere summer season have competed with concerns that U.S. tariffs on trading partners will slow economic growth and fuel consumption.

Brent crude futures fell 63 cents, or 0.9%, to $68.08 a barrel at 11:50 GMT. U.S. West Texas Intermediate crude futures fell 69 cents, or 1%, to $65.83. U.S. President Donald Trump has threatened 30% tariffs on imports from the European Union starting August 1, a level European officials say is unacceptable and would end normal trade between the world's two largest markets.

The European Commission is preparing to target 72 billion euros ($84.1 billion) worth of U.S. goods for potential tariffs if trade talks with Washington fail. Trump also said on Monday that the United States would impose "very heavy tariffs" on Russia within 50 days if there is no agreement to end the war in Ukraine.

"The latest U.S. attacks on Russia failed to rekindle concerns about sustained supply disruptions, and as a result, oil prices continued to decline yesterday," PVM oil analyst Tamas Varga said in a note. However, an improving demand outlook from China limited losses.

Chinese state-owned refineries are ramping up production after completing maintenance to meet higher third-quarter fuel demand and to rebuild diesel and gasoline stocks that are at their lowest in years, traders and analysts said.

"The potential peak in Chinese oil demand often comes up in discussions, but we think those concerns may be overblown, as a closer look shows demand remains resilient," Barclays said in a note on Wednesday. The bank expects Chinese oil demand to grow by 400,000 barrels per day (bpd) annually in the first half of this year to 17.2 million bpd.

Meanwhile, OPEC's monthly report on Tuesday forecast that the global economy will improve in the second half of this year, boosting the oil demand outlook. Brazil, China, and India exceeded expectations, while the US and the European Union are recovering from last year, it added.

US crude oil, distillate, and gasoline inventories rose last week, according to market sources, citing data from the American Petroleum Institute on Tuesday. Crude oil stocks rose by 839,000 barrels in the week ending July 11, the sources said. Gasoline inventories rose by 1.93 million barrels and distillate stocks rose by 828,000 barrels, they added. (alg)

Source: Reuters