Oil prices retreated on Thursday as investors weighed the implications of the latest Federal Reserve rate decision and the outcome of trade talks between U.S. President Donald Trump and Chinese President Xi Jinping, while awaiting fresh supply signals from OPEC+.
At 08:25 ET (12:25 GMT), Brent crude for December delivery fell 0.7% to $63.86 a barrel, while West Texas Intermediate (WTI) futures dropped 0.7% to $60.06. Both benchmarks are heading for monthly losses exceeding 3%, marking a third consecutive month of declines as concerns about global oversupply persist.
Crude Eases on Trade Uncertainty
The Trump-Xi meeting, held earlier Thursday in South Korea on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit, drew intense market attention but left traders searching for clarity.
Trump described the discussions as “amazing,” announcing that Washington will lower tariffs on Chinese goods to 47% from 57% in a one-year deal. In return, Beijing will resume purchases of U.S. soybeans, continue exports of rare earth minerals, and crack down on illicit fentanyl trafficking.
However, the absence of specific terms or timelines left investors skeptical about the deal’s durability. “Investors see the announced agreement between China and the U.S. as more of a de-escalation of tension than a structural change in relationship,” said Tamas Varga, analyst at PVM.
The cautious tone reinforced expectations that trade tensions could resurface, tempering risk appetite and weighing on crude prices.
Stronger Dollar, Hawkish Fed Add Pressure
Oil also faced headwinds from a stronger U.S. dollar, which surged overnight after the Federal Reserve cut interest rates by 25 basis points, bringing its target range to 3.75%–4.00%.
While the move was widely anticipated, Fed Chair Jerome Powell struck a hawkish note, saying another rate reduction in December was “far from a foregone conclusion,” and warning that the ongoing government shutdown was clouding the economic outlook.
The greenback’s rally of nearly 0.6% against a basket of major currencies made dollar-priced commodities such as oil more expensive for non-U.S. buyers. Some profit-taking later in Asian trading saw the dollar ease by 0.2%, providing limited relief for crude.
Although lower interest rates typically support energy demand by stimulating economic activity, Powell’s remarks dampened hopes of an extended easing cycle — a factor that kept oil’s rebound in check.
Attention Shifts to OPEC+
Traders are now focused on the upcoming OPEC+ meeting this weekend, where the producer alliance is expected to announce another supply increase of roughly 137,000 barrels per day for December.
The group — which includes OPEC members and allies such as Russia — has continued to raise output despite weaker market fundamentals, aiming to reclaim market share amid a prolonged slump in prices.
Analysts expect the meeting to shape short-term sentiment in the oil market, as participants gauge whether production growth will deepen the existing imbalance between supply and demand.
With geopolitical uncertainty lingering and monetary policy tightening expectations revived, oil remains caught between macro headwinds and fundamental oversupply concerns — a combination likely to keep prices under pressure heading into November.
