Oil Prices Rebound on Economic Strength and Signs of Trade Easing
Oil prices climbed on Thursday, halting a three-day losing streak, as better-than-expected economic data from major oil consumers and signs of easing global trade tensions improved market sentiment.
As of 0630 GMT, Brent crude futures edged up by 8 cents (0.1%) to $68.60 per barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 16 cents (0.2%) to reach $66.54. Both benchmarks had declined over 0.2% in the previous trading session.
U.S. President Donald Trump signaled that smaller nations would soon receive formal notices of their U.S. tariff rates. He also suggested he might implement a broad 10% or 15% tariff on these countries. This week, new trade agreements were announced with Indonesia and Vietnam.
Trump expressed renewed optimism about potential trade arrangements with Beijing regarding illicit drugs, indicated that a trade deal with India was likely near, and hinted at a possible agreement with the European Union as well.
“Trump’s softened stance on China and the prospect of reduced tariffs on smaller economies are being viewed as encouraging developments for global trade,” noted independent analyst Tina Teng.
She added that stronger-than-anticipated economic data from China and a larger-than-expected drop in U.S. oil stockpiles were both fueling bullish sentiment in the oil market.
According to the U.S. Energy Information Administration (EIA), crude inventories declined by 3.9 million barrels last week, falling to 422.2 million barrels—far exceeding analysts’ expectations for a drawdown of just 552,000 barrels. The sharp drop points to increased refinery activity, tighter supply, and rising demand.
However, gains in oil prices were limited by unexpectedly large increases in gasoline and diesel inventories, which sparked concerns that summer travel demand might be weakening, according to a Thursday note from ANZ analysts.
The U.S. Federal Reserve’s latest economic update, released Wednesday, reported an uptick in economic activity in recent weeks. Still, the overall outlook was described as “neutral to slightly pessimistic,” with businesses citing higher import tariffs as a driver of inflationary pressures.
In China, second-quarter economic growth came in stronger than feared, partly due to accelerated activity ahead of expected tariffs, easing some concerns about the health of the world’s largest crude importer. Data also showed that Chinese crude oil processing in June was 8.5% higher year-on-year, indicating solid fuel demand.
“Market support has come from positive developments in U.S.-China trade, including Trump lifting restrictions on AI chip sales to China and news of a trade deal with Indonesia,” said John Paisie, president of Stratas Advisors.
