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Surprise US stockbuild, Trump tariffs weigh on the market as oil prices remain steady

The price of oil was stable on Thursday, as investors assessed the risks of a supply shortage amid President Donald Trump’s call for a quick resolution to the Ukraine war through additional tariffs. However, a surprising build-up in U.S. crude stock weighed on the prices.

Brent crude futures September expiring on Thursday fell 10 cents or 0.1% to $73.14 per barrel at 0345 GMT. Brent's October contract, which is more active, was down 14 cents or 0.2% at $72.33.

U.S. West Texas Intermediate Crude for September fell 5 cents or 0.1% to $69.95 per barrel.

Both benchmarks closed 1% higher Wednesday.

Oil contracts are stuck in a holding pattern, as neither buyers or sellers can muster enough conviction to move prices either higher or lower. This is especially true on the eve of the deadline for the new U.S. Tariffs set for August 1.

Sachdeva continued, "On the one hand, Trump’s hawkish remark on Russian oil sanctions continue to support tight-market premiums. On the other hand, a strong dollar, tepid growth indicators globally, and that unexpected EIA increase are capping gains."

Trump announced that he would begin imposing measures against Russia, including 100% secondary duties on its trading partners if the country did not end the war in 10-12 days. This was a move up from a 50-day earlier deadline.

Toshitaka Takawa, an analyst with Fujitomi Securities, said that the concern about secondary tariffs on countries who import Russian crude oil will restrict supplies continues to drive interest in buying.

The U.S. warned China, which is the biggest buyer of Russian crude oil, it would face high tariffs if they continued to buy.

The U.S. Treasury Department issued new sanctions Wednesday against over 115 Iran linked individuals, entities, and vessels. This is an indication that the Trump administration has intensified its "maximum-pressure" campaign following the June bombing of Tehran's nuclear sites.

The Energy Information Administration reported on Wednesday that U.S. crude inventories increased by 7.7 millions barrels during the week ended July 25, to 426.7million barrels. This was due to lower exports. Analysts expected a draw of 1.3 million barrels.

The gasoline stocks dropped by 2.7m barrels to 228,4m barrels. This was far more than expected, which predicted a 600k barrel draw. ?

Tazawa, of Fujitomi Securities, said that the U.S. crude stock data revealed a surprising build, but an unexpected gasoline draw confirmed the strong driving season demand. This resulted in a neutral effect on the oil market. (Reporting from Yuka Obayashi, Tokyo; Jeslyn Lerh, Singapore; Editing done by Lincoln Feast.)

(source: Reuters)