Oil prices rebounded in early Thursday trading, reversing previous losses as stronger-than-expected economic data from the US and China, coupled with signs of easing trade tensions, bolstered investor confidence.
At 0000 GMT, Brent crude futures rose by $0.27 (0.39%) to $68.79 per barrel, while US West Texas Intermediate (WTI) gained $0.31 (0.47%), reaching $66.69 per barrel.
This uptick follows a slight decline of more than 0.2% in both benchmarks during the previous session.
US Crude Inventories Fall Sharply
The Energy Information Administration (EIA) reported a significant 3.9 million-barrel draw in US crude oil inventories last week, far exceeding analyst expectations of a 552,000-barrel decrease. The drawdown brought total inventories to 422.2 million barrels, signaling:
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Stronger refinery activity
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Tighter supply levels
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Steady demand growth
“Product spreads remain relatively wide in all regions,” noted John Paisie, president of Stratas Advisors, highlighting favorable refining margins that are helping support crude prices.
However, gains were capped by unexpected builds in gasoline and diesel inventories, indicating some softness in refined product demand.
US Economic Activity Stable but Cautious
The US Federal Reserve’s Beige Book, released Wednesday, showed that economic activity had picked up modestly. However, businesses continued to voice concerns over import tariffs, which are pushing up input prices and clouding the outlook.
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China’s Oil Demand Defies Slowdown Fears
Despite a broader economic slowdown, China’s Q2 growth did not deteriorate as sharply as feared. A key driver was front-loading of exports to avoid future US tariffs.
Importantly, China’s crude oil throughput in June rose 8.5% year-on-year, pointing to resilient fuel demand in the world’s largest crude importer.
Geopolitical Signals Favor Market Stability
Further support came from improved trade rhetoric:
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President Donald Trump lifted the ban on AI chip sales to China.
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Announcements of deals with Indonesia, India, and Europe added to positive sentiment.
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Talks around combatting illicit drug trade with Beijing suggested diplomatic cooperation was improving.
Such developments ease fears that escalating tariffs could severely dent global growth and oil demand.
Market Outlook
While the oil market remains sensitive to tariff dynamics and macroeconomic risks, the latest inventory data, refining margins, and global diplomatic shifts are offering short-term price support. Investors will continue to monitor:
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US-China trade negotiations
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Ongoing US inventory trends
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OPEC+ policy signals
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Global economic indicators
