Oil prices fell on Thursday (October 30th) as investors assessed the potential for a truce in the trade dispute between the United States and China. President Donald Trump lowered tariffs on China after a meeting with President Xi Jinping in South Korea.

Brent crude futures fell 53 cents, or 0.82%, to $64.39 per barrel at 09:08 GMT. US West Texas Intermediate crude fell 46 cents, or 0.76%, to $60.02.

Trump agreed to reduce tariffs on China from 57% to 47% in a one-year deal in exchange for Beijing continuing purchases of US soybeans, maintaining the flow of rare earth exports, and cracking down on illicit fentanyl trafficking.

Investors view the announced deal between China and the US more as an easing of tensions than a structural change in the relationship, said PVM analyst Tamas Varga, who noted that lower Brent prices appear to contradict a sharp decline in US oil inventories.

FED RATE CUT BOOSTS ECONOMIC OUTLOOK

The US Federal Reserve also boosted the economic outlook by lowering interest rates on Wednesday, in line with market expectations. However, it signaled that the cut may be the last of the year as the ongoing government shutdown threatens data availability.

"The Fed's decision underscores a broader shift in its policy cycle – one that favors gradual reflation and support over restraint, providing a breath of fresh air for commodities sensitive to economic activity," said Rystad Energy chief economist Claudio Galimberti in a note.

The rise in Brent and WTI prices in the previous session also reflected a larger-than-expected decline in US crude and fuel inventories. However, both benchmarks are expected to decline by more than 3% in October, which would be the third consecutive month of declines amid concerns about oversupply.

U.S. crude inventories fell by 6.86 million barrels to 416 million barrels in the week ending October 24, according to the Energy Information Administration (EIA), compared with analysts' expectations in a Reuters poll for a decrease of 211,000 barrels.

Another key point for investors is the OPEC+ meeting scheduled for November 2, where the alliance is likely to announce a supply increase of 137,000 barrels per day (bpd) for December. (alg)

Source: Reuters