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Trump's August 1 tariff deadline looms

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Trump says Mexico trade deal extended for 90 days

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Market awaiting more clarity after Trump tariff threats

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Higher US crude stocks were unexpected

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Decline in gasoline stocks reflects driving season demand

(Updates with settlement prices)

By Georgina McCartney

HOUSTON, July 31 (Reuters) - Oil prices declined on

Thursday as U.S. President Donald Trump's August 1 tariff

deadline loomed over investors, with uncertainty surrounding

countries yet to negotiate a trade deal with the U.S.

Brent crude futures for September expired on Thursday

and settled down 71 cents, or 0.97% to $72.53 a barrel. U.S.

West Texas Intermediate crude for September settled down

74 cents, or 1.06%, to $69.26. U.S. crude futures fell more than

$1 earlier in the session.

Both benchmarks had recorded 1% gains on Wednesday.

Countries that haven't negotiated a trade deal or received

a tariff letter from the Trump administration will be hearing

from the U.S. about the terms of trade by the end of the day,

the White House said on Thursday.

The U.S. has cut deals with two-thirds of its top 18 trade

partners.

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, Aluminium, 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.

Lower interest rates reduce consumer borrowing costs and can

boost economic growth and demand for oil.

Meanwhile, U.S. crude oil production rose to a record 13.49

million barrels per day in May, data from the U.S. Energy

Information Administration showed.

U.S. crude output was up 24,000 bpd in May from the prior

record in April, the EIA data showed.

U.S. crude oil inventories rose by 7.7 million barrels to 426.7

million barrels in the week ending July 25, driven by lower

exports, the EIA said on Wednesday. Analysts had expected a draw

of 1.3 million barrels.

Gasoline stocks fell by 2.7 million barrels to 228.4 million

barrels, far exceeding forecasts for a draw of 600,000

barrels.​

"U.S. inventory data showed a surprise build in crude

stocks, but a bigger-than-expected gasoline draw supported the

view of strong driving season demand, resulting in neutral

impact on the oil market," said Fujitomi Securities analyst

Toshitaka Tazawa.

RUSSIA THREAT CURBS LOSSES

The threat of U.S. sanctions on Russia has helped support

oil prices this week.

On Monday, Trump said he would start imposing measures on

Russia, including 100% secondary tariffs on its trading

partners, if it did not make progress on ending the war in

Ukraine within 10-12 days, moving up an earlier 50-day deadline.

The U.S. has also warned China, the largest buyer of Russian

oil, that it could face huge tariffs if it continued its

purchases.

India's state refiners have not sought Russian crude in the past

week or so, four sources familiar with the refiners' purchase

plans told Reuters, as Trump has warned countries not to

purchase oil from Moscow.

On Wednesday, the U.S. Treasury Department announced fresh

sanctions on more than 115 Iran-linked individuals, entities,

and vessels, stepping up the Trump administration's maximum

pressure campaign after bombing Iranian nuclear sites in June.