Crude oil prices edged upward on Thursday, buoyed by a sharper-than-expected decline in U.S. stockpiles. However, lingering concerns about global trade uncertainties kept overall market momentum subdued.
As of early Thursday trading in Asia, Brent Crude inched up 0.25% to $68.68, while West Texas Intermediate (WTI) rose by 0.29% to $65.44 per barrel. These modest gains ended a four-day losing streak, though analysts noted that price movements remain tightly bound amid macroeconomic headwinds.
U.S. Crude Stockpile Dip Reinforces Supply Tightness
Fresh data from the U.S. Energy Information Administration (EIA) showed a 3.17 million-barrel reduction in commercial crude inventories for the week ending July 19, almost twice the anticipated draw. The drop reflects elevated refinery utilization and sustained export flows, tightening supply conditions, and injecting some optimism into a market that has recently seen downward pressure.
The draw leaves inventories nearly 9% below the seasonal five-year average, underscoring the ongoing imbalance between supply and demand. Meanwhile, gasoline reserves declined by 1.7 million barrels, reflecting continued demand strength. On the other hand, distillate stocks, including diesel and heating oil, increased by 2.9 million barrels in line with seasonal patterns.
Trade Policy Still Clouding Outlook
While falling inventories have revived some bullish sentiment, global oil markets remain on edge over unresolved trade issues. A pending U.S. tariff decision, expected by August 1, has kept investors cautious. However, a recent U.S.-Japan pact offered some relief, featuring scaled-back tariffs and pledging over $500 billion in Japanese investments across sectors, including energy and agriculture.
Elsewhere, the European Union’s signal that it might retaliate with tariffs of its own has added further uncertainty. Ongoing negotiations may shape the near-term demand landscape, particularly if protectionist policies have a negative impact on global growth.
Balanced Between Supply Support and Demand Risks
The current market environment reflects a delicate equilibrium: tightening inventories and robust U.S. exports offer price support, while the specter of trade-related demand slowdowns imposes resistance. Analysts suggest that without a decisive geopolitical or policy shift, crude prices are likely to remain rangebound in the short term.
As talks continue and new data emerge, traders are watching for signals that could tilt the balance, either toward a breakout or deeper correction.