Wednesday saw oil prices dip, as markets analysed the results of US-China trade discussions, which still await President Donald Trump’s review. 

Market pressures included weak oil demand from China coupled with increased output from OPEC+.

“Despite recent strength, and what could be viewed as a potential breakout, oil has yet to push out of a trading range which has been building over the last two months,” said David Morrison, senior market analyst at Trade Nation. 

Prices appear to be pausing as they await a fresh catalyst. 

This seems likely to come from supply commentary, or trade developments, particularly any news from US-China trade talks. 

At the time of writing, the price of West Texas Intermediate crude oil on the New York Mercantile Exchange was at $65.07 a barrel, largely unchanged from the previous close. Brent crude oil on the Intercontinental Exchange was also flat at $66.89 a barrel. 

Both benchmarks had fallen earlier in the session on Wednesday. 

Experts believe that oil prices have experienced brief periods of bullishness, but those have not materialised into substantial rallies.

From a bullish standpoint, the daily moving average divergence convergence appears generally constructive. It has returned to and continues to rise above the neutral level. 

“But crude has been in this situation many times over the past year or so. And rally attempts have tended to be snuffed out relatively quickly,” Morrison said. 

Trade negotiations

Following intense two-day London talks, US Commerce Secretary Howard Lutnick reported Tuesday that American and Chinese officials have established a framework aimed at restoring their trade agreement and addressing China’s export limitations on rare earth minerals and magnets.

Trump will be briefed on the outcome before approving it, Lutnick added.

Meanwhile, a federal appeals court handed Trump a victory Tuesday, deciding his “Liberation Day” tariffs could remain in place for now. 

This reverses a prior decision by the US Court of International Trade, which had deemed the tariffs’ enactment illegal and blocked their implementation last month.

The oil market remains cautious amid the increasingly complex trade narratives of the Trump administration. 

Supply

Simultaneously, regarding supply, OPEC+ intends to raise oil output by 411,000 barrels daily in July, continuing their fourth consecutive month of easing production cuts. 

Some experts, however, question if regional demand will be sufficient to absorb this additional supply.

The summer driving season in the US is likely to generate some demand for fuel in the world’s biggest consumer of crude oil. 

However, experts remain skeptical about whether global oil demand could meet OPEC’s supply increases. 

Eight countries from the OPEC+ group, including Saudi Arabia and Russia have been raising output of oil by 411,000 barrels a day each month since May. 

EIA predicts fall in US production

According to the latest Short-Term Energy Outlook, published late on Tuesday, the Energy Information Administration (EIA) has adjusted its 2026 projections for US crude oil production downward. 

The EIA now forecasts a 50,000 barrel per day year-on-year decrease in 2026, bringing output to 13.37 million barrels per day. 

Notably, this projected decline would mark the first annual drop in US production since 2021, when production was impacted by the COVID-19 pandemic.

For 2025, annual output growth is projected to remain constant at 210,000 barrels per day year-over-year.

“The decline isn’t too surprising, given the recent slowdown in drilling activity,” Warren Patterson, head of commodities strategy at ING Group, said. 

A 33-rig decline over the past six weeks has pushed the US oil rig count to 442, marking its lowest point since October 2021, amid the current period of low prices.

ING’s Patterson added:

Given our view that oil prices will be lower towards the end of this year, there’s scope for further downward revisions in US crude oil output estimates for next year.

Uncertainties in refined product market

Amid rising uncertainty in the refined products market, the European Commission, led by President Ursula von der Leyen, has proposed an import ban on goods derived from Russian crude oil.

The European Union has prohibited imports of Russian crude oil and refined products.

However, refined products derived from Russian crude are still entering the bloc through third-party countries.

“This would mostly put refined product imports from India and Turkey at risk,” Patterson said. 

India and Turkiye are significant importers of Russian crude oil, collectively receiving 1.77 million barrels per day in the first quarter of 2025, as per LSEG data. 

Concurrently, India and Turkiye are also exporters of refined petroleum products to the European Union, which imported over 350,000 barrels daily from these two nations. 

Patterson added:

Such a move would lead to yet another shift in refined product trade flows. But the Commission implementing such a ban would be difficult, given that refiners blend different types of crude oil.

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India’s Maruti Suzuki, facing rare earth shortages, has significantly reduced its initial electric vehicle e-Vitara production goals by two-thirds, as revealed in a document, highlighting ongoing supply chain disruptions within the automotive sector due to China’s export restrictions, Reuters reported.

Reuters has reviewed a company document indicating that India’s leading car manufacturer, despite initially stating on Monday that the ongoing supply chain issues had not affected them, has adjusted its production targets for the e-Vitara. 

The revised plan outlines the production of approximately 8,200 e-Vitaras from April to September, down from the initial target of 26,500 units.

Shortages in the rare earth materials crucial for magnets and various high-tech components were cited as the reason behind the constraints on supply.

The document still stated that Maruti intends to achieve its annual EV production goal of 67,000 units for the fiscal year ending March 2026 by increasing output in the months ahead.

China’s dominance

China’s imposition of restrictions on the export of specific rare earth minerals has sent shockwaves through the international automotive manufacturing sector, triggering widespread alarm among major players. 

These companies have publicly expressed grave concerns about the potential for severe disruptions to their intricate and globally interconnected supply chains. 

While some firms based in the United States, across various nations in Europe, and within Japan have reported a gradual easing of supply pressures, attributed to their successful acquisition of necessary export licenses directly from Beijing authorities, India remains conspicuously in a state of limbo. 

Indian industries are still awaiting the critical regulatory approvals from China, leading to escalating anxieties about the imminent threat of potential production halts and significant economic setbacks. 

This geopolitical tension has underscored the vulnerability of global industries to trade disputes and resource control, further emphasising the strategic importance of diversifying supply chains and developing alternative sources for essential materials. 

The situation also highlights the complex interplay between international trade policies, national interests, and industrial stability in the modern world economy.

Maruti’s e-Vitara

The e-Vitara, unveiled with significant anticipation at India’s car show this January, is vital for Maruti Suzuki’s electric vehicle strategy in the nation. 

This launch represents Maruti’s debut in a market segment the Indian government, led by Prime Minister Narendra Modi, aims to expand to 30% of all car sales by 2030, a substantial increase from the approximately 2.5% recorded last year.

A production delay for Maruti Suzuki’s electric SUV, the e-Vitara, has surfaced due to a rare earths supply issue.

This could negatively affect Suzuki Motor, as India is its primary revenue market and a key electric vehicle manufacturing center. 

Most of the India-made e-Vitaras are intended for export to Europe and Japan by mid-2025.

Despite these concerns, Maruti stated that the rare earths problem would not significantly delay the e-Vitara’s launch. 

Chair RC Bhargava had also noted that production is currently unaffected. Neither Maruti nor Suzuki responded to requests for further comments.

Following the announcement, Maruti’s stock price on the Indian stock exchange experienced a decline, dropping as much as 1.4% to reach its lowest point of the day.

The company has not yet commenced bookings for the e-Vitara.

Some analysts have expressed concern that Maruti’s EV launch is delayed in the world’s third-largest car market, where Tesla is also anticipated to start sales this year.

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European stock markets showed a mixed and generally flat performance in early trading on Wednesday, as investors weighed positive developments in US-China trade negotiations against some underwhelming corporate earnings and awaited key economic data.

While a tentative trade agreement offered a degree of optimism, individual market movements were nuanced.

About 30 minutes into Wednesday’s trading session, the pan-European Stoxx 600 index was seen trading flat, indicating no cohesive directional momentum among individual sectors.

Looking at the major national stock exchanges, France’s CAC 40 emerged as an early front-runner, posting a gain of around 0.3%.

London’s FTSE 100 was last seen trading 0.1% higher, while Germany’s DAX index showed little change from its previous close.

US-China trade talks: a framework for agreement

A significant driver for global market sentiment was the news emerging from high-level trade talks between the United States and China in London.

After a second day of discussions, representatives from both nations announced they had reached an agreement on a framework to ease trade tensions, with the deal now awaiting approval from the leaders of the two countries.

“We have reached a framework to implement the Geneva consensus and the call between the two presidents,” US Commerce Secretary Howard Lutnick told reporters.

A critical component of this latest agreement involves Chinese restrictions on rare-earth exports to the US Lutnick stated that this is a “fundamental part” of the deal and that the US expects the issue “will be resolved in this framework implementation.”

He further indicated that US restrictions on sales of advanced technology to China, imposed in recent weeks, would likely be rolled back as Beijing approves rare-earth exports.

Global markets had a mixed initial reaction to this tentative consensus. Asia-Pacific markets climbed overnight on the apparent breakthrough.

However, US stock futures inched lower, with investors also looking ahead to US May inflation data, which could influence future Federal Reserve policy.

Corporate spotlight: Inditex sales miss

On the corporate front, Zara owner Inditex reported weaker-than-expected quarterly sales on Wednesday.

The Spanish retail giant also flagged a slower start to the summer season compared to last year, citing broader economic uncertainty.

Inditex posted revenues of 8.27 billion euros ($9.44 billion) for its fiscal first quarter (February 1 to April 30), slightly below the 8.39 billion euros forecast by LSEG analysts.

Net income for the quarter came in at 1.3 billion euros, just shy of the 1.32 billion euros analysts had estimated.

In other notable news, tech billionaire Elon Musk stated on Wednesday that he regretted some of the social media posts he made last week during an explosive and highly public dispute with his formerly close ally, US President Donald Trump.

This admission follows a period of escalating tension between the two prominent figures.

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Inditex share price has held steady in the past few years as its business remained resilient despite the rising competition from companies like Temu and Shein. It has jumped to €50, its highest point since March 3, and 192% from its lowest point in 2022. 

Inditex business is doing well

Inditex, the parent company of Zara, Massimo, Dutti, Bershka, and Stradivarius, is doing well despite the ongoing challenges in the global economy. 

According to Bloomberg, the company’s sales jumped by 6% in the five weeks to June 9. This growth rate was higher than what happened in the previous quarter and in line with what analysts were expecting.

The most recent results showed that its sales jumped by 1.5% to €8.3 billion. They grew by 4.2% in constant currency.

Inditex’s profitability continued to boom during the quarter. Its gross profit rose by 1.5% to €5.0 billion, while its earnings before interest, tax, depreciation, and amortization rose by 1% to €2.4 billion.

Inditex’s business has thrived at a time when many companies in the industry are facing major challenges as the economic slowdown in most countries continues. Retail sales in Europe and the United States have wavered in the past few years.

At the same time, it is facing substantial competition from companies like Temu and Shein that have mastered manufacturing and shipping.

Read more: Dressed for disaster? The harsh impact of Trump’s tariffs on the fashion industry

It is also battling high tariffs in the United States, which accounts for about 18% of global sales. 

Inditex’s strong performance is because of its lower price, well-known brands, its store expansions and refurbishment of existing stores. It is also spending about €1.8 billion to improve its technology and another €9 million to expand its logistics network.

These strategies have helped it to do better than other companies like H&M and Boohoo. Boohoo stock price has crashed by over 80% from its highest point since the pandemic highs.

A key concern among investors is that Inditex, the biggest listed clothing retailer, has become highly overvalued. Its price-to-earnings ratio moved stands at 29, higher than other companies in the industry. This valuation is also higher than the S&P 500 Index, even though its annual growth rate is less than 2%. 

Inditex share price analysis

The three-day chart shows that the Inditex stock price formed a double-top pattern at €54.62 in December and February this year. A double-top is one of the most bearish patterns in technical analysis.

It validated this pattern in March when the company published soft financial results. It has now bounced back and moved above the 100-day Exponential Moving Average (EMA), a sign that bulls are in control. It also jumped above the double-top’s neckline at €47.78. 

Therefore, the Inditex share price will likely continue rising as bulls target the next key resistance level at €54, up by 10.3% from the current level. A move below the 100-day moving average at $46 will invalidate the bullish view.

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