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Oil prices ease as traders evaluate US tariffs and OPEC+ production hike

Investors retreated from oil prices on Tuesday, after a nearly 2% rise in the previous session. They were assessing new developments regarding U.S. Tariffs and a larger-than-expected OPEC+ production increase for August.

Brent crude futures fell 22 cents or 0.3% to $69.36 per barrel at 0330 GMT. U.S. West Texas Intermediate Crude fell 27 cents or 0.4% to $67.66 per barrel.

U.S. president Donald Trump began Monday telling U.S. trade partners, including major suppliers South Korea, Japan, as well as smaller U.S. Exporters such as Serbia, Thailand, and Tunisia that the U.S. will begin imposing sharply higher tariffs on August 1. He later clarified that this deadline is not 100% certain.

Trump's tariffs have caused uncertainty on the market, and there are concerns that they could negatively impact the global economy, and therefore, oil demand.

There are signs that demand is still strong, especially in the U.S.

Last week, AAA data showed that a record number of Americans (72,2 million) were expected to travel over 50 miles (80 kilometers) during their Fourth of July holidays.

The U.S. Commodity Futures Trading Commission published data on Monday that showed money managers increased their net-long positions in futures and options contracts for crude oil in the week leading up to July 1.

Seasonal factors continue to support a healthy prompt demand. It remains to be seen if the forward demand can continue to absorb OPEC+'s larger than expected supply.

India, the third largest oil consumer in the world, also showed signs of increased demand.

government data

Reporting fuel consumption was 1.9% more than it was a year earlier in June.

On Saturday, the Organization of the Petroleum Exporting Countries (OPEC+) and its allies agreed to increase production by 548,000 barrels a day in August. This is a higher rate than the 411,000 bpd they increased for the previous three months.

This decision eliminates almost all the voluntary reductions of 2.2 million bpd that the group made. Five sources with knowledge of the situation say that they are likely to approve a 550,000-bpd increase for September at their meeting on August 3. This would undo all the cuts.

Analysts said that the actual increase in production has been less than what was announced and the majority of the supply comes from Saudi Arabia. (Reporting from Stephanie Kelly in New York, and Jeslyne Lerh in Singapore. Editing by Christian Schmollinger).

(source: Reuters)