Oil prices fall as market weighs US, Mexico trade deal extension

Oil prices declined on Thursday as investors considered the extension of an existing trade deal between the U.S. and Mexico, while a surprise build in U.S. crude stocks on Wednesday also dragged down prices.

Brent crude futures for September , set to expire on Thursday, declined by 74 cents, or 1.01%, to $72.50 a barrel by 1:31 p.m. EDT (1731 GMT). U.S. West Texas Intermediate crude for September fell 90 cents, or 1.29%, to $69.10.

Both benchmarks had recorded 1% gains on Wednesday.

U.S. crude futures fell by more than $1 a barrel earlier in the session.

U.S. President Donald Trump said he and Mexican President Claudia Sheinbaum had agreed to extend an existing trade deal between their countries for 90 days and to continue talks over that period with the goal of signing a new deal.

"Mexico will continue to pay a 25% Fentanyl Tariff, 25% Tariff on Cars, and 50% Tariff on Steel, Aluminum, and Copper. Additionally, Mexico has agreed to immediately terminate its Non Tariff Trade Barriers, of which there were many," Trump said in a social media post.

News of the extension weighed on crude futures, said John Kilduff, partner at Again Capital in New York.

"Overall the tariffs are negative for oil demand going forward, and this situation with Mexico kicks the can down the road," Kilduff said.

U.S. inflation increased in June as tariffs boosted prices for imported goods such as household furniture and recreation products, supporting views that price pressures would pick up in the second half of the year and delay the Federal Reserve from cutting interest rates until at least October.