Oil Prices Climb Over 1% on Supply Risks and U.S.-China Trade Hopes
Oil prices rose for a second straight day on Wednesday, gaining more than 1% as investors weighed supply risks linked to sanctions and renewed optimism over a potential U.S.-China trade deal. Markets also reacted to Washington’s plan to purchase oil for its strategic reserves, adding further support to prices.
As of 04:00 GMT, Brent crude futures climbed 94 cents, or 1.5%, to $62.26 per barrel, while U.S. West Texas Intermediate (WTI) gained 92 cents, or 1.6%, to $58.16. The rebound follows a sharp drop earlier in the week, when prices hit a five-month low amid oversupply concerns and weaker demand from ongoing trade tensions.
Supply Risks Offset Bearish Market Sentiment
Fresh supply disruptions helped offset bearish market sentiment driven by high inventories and sluggish global demand. Overnight reports indicated that a summit between U.S. President Donald Trump and Russian President Vladimir Putin had been postponed, while Western pressure on Asian buyers of Russian oil added further uncertainty to global supply.
“Despite a general bearish tone from oversupply and weak demand, supply disruption risks in regions such as Russia, Venezuela, Colombia, and the Middle East continue to keep oil above $60,” said Mukesh Sahdev, founder and CEO of XAnalysts.
Investors also monitored rising tensions between the U.S. and Venezuela, a key oil producer. A group of U.N. experts criticized recent U.S. strikes on Venezuelan vessels as “extrajudicial executions,” calling the escalation dangerous for international stability.
Trade Optimism and U.S. Reserve Plans Support Oil Prices
Oil markets found additional support from hopes of progress in U.S.-China trade negotiations, with talks set to take place this week in Malaysia. President Donald Trump said he expects to reach a “fair deal” with Chinese President Xi Jinping, whom he plans to meet in South Korea next week.
According to ING strategists, Trump’s positive tone on trade, along with the cancellation of the Trump-Putin summit, helped lift sentiment in oil markets.
Meanwhile, U.S. crude, gasoline, and distillate inventories declined last week, according to data from the American Petroleum Institute (API). Analysts at ANZ Research added that the U.S. government’s decision to refill its Strategic Petroleum Reserve also supported prices.
The U.S. Department of Energy confirmed plans to purchase 1 million barrels of crude oil for the reserve, taking advantage of relatively low prices to bolster national stockpiles.
