Oil prices slipped on Thursday as investors assessed the implications of the Federal Reserve’s rate cut, the outcome of the Trump-Xi trade meeting, and prospects for new supply measures from OPEC+ later this week.
By 08:25 ET (12:25 GMT), Brent crude for December delivery was down 0.7% at $63.86 per barrel, while West Texas Intermediate (WTI) futures fell 0.7% to $60.06. Both benchmarks are set to close October down more than 3%, extending their three-month losing streak amid persistent oversupply and subdued demand growth.
Trade Hopes Fade Despite “Amazing” Talks
Markets initially drew some optimism from reports of a meeting between U.S. President Donald Trump and Chinese President Xi Jinping in South Korea, held alongside the APEC summit.
Trump characterized the discussion as “amazing,” saying he had reached a one-year deal with Xi to cut U.S. tariffs on Chinese goods to 47% from 57%. In exchange, he said China agreed to resume soybean purchases, maintain exports of rare earth minerals, and curb the flow of fentanyl into the U.S.
Despite the positive tone, the lack of concrete details left traders unconvinced. Tamas Varga of PVM noted that “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.”
That uncertainty tempered risk sentiment across commodities markets, with oil pulling back from early gains as investors questioned whether the agreement would lead to lasting trade stability.
Dollar Strength and Powell’s Tone Cap Gains
The Federal Reserve’s latest policy move also weighed on oil prices. As expected, the Fed trimmed rates by 25 basis points, bringing the federal funds rate to 3.75%–4.00%, but struck a cautious tone on future moves.
Fed Chair Jerome Powell warned that another cut in December was “far from a foregone conclusion,” citing economic uncertainty from the ongoing government shutdown and mixed economic indicators.
His remarks sent the U.S. dollar sharply higher, rising almost 0.6% against a basket of peers — a move that typically pressures commodities priced in dollars. The greenback later eased 0.2% in Asian trade as traders took profits, but oil remained under pressure.
Although rate cuts often support demand for energy by boosting growth, Powell’s hawkish tone suggested a more measured policy path, muting any tailwind for crude.
OPEC+ Meeting Looms Over Market
Attention is now turning to the OPEC+ meeting scheduled for this weekend, where producers are expected to announce a 137,000-barrel-per-day increase in December output.
The decision could prove contentious, as some members push for higher production to defend market share, while others urge restraint amid falling prices and rising inventories.
OPEC+ has been gradually raising output throughout 2025 despite weak demand growth, seeking to counter competitive pressures from non-OPEC suppliers. However, analysts warn that further increases could deepen the market surplus.
With trade progress uncertain, monetary policy tightening expectations resurfacing, and OPEC+ set to expand supply, crude markets are likely to remain volatile — and the path of least resistance for prices, at least for now, appears downward.