Oil Prices Near Seven-Week Highs As Trade Truce Calms Market Jitters
Oil prices inched higher on Wednesday, hovering near a seven-week high as markets reacted to a breakthrough in US-China trade talks and anticipated tighter inventories in the United States.
Brent crude rose 9 cents (0.1%) to US$66.96 per barrel, while US West Texas Intermediate (WTI) gained 18 cents (0.3%) to US$65.16 as of 0802 GMT.
The modest gains followed news that Washington and Beijing had agreed on a framework to reset trade negotiations, with China committing to ease export restrictions on rare earth minerals and magnets. The development eased short-term concerns over demand from the world's two largest oil consumers.
'Trade-related downside risk in oil has been temporarily removed,' said Tamas Varga, analyst at PVM. However, he cautioned that the longer-term outlook for economic growth and oil demand remains unclear.
Tony Sycamore, a market analyst at IG, added: 'The agreement removes some downside risks, particularly to the Chinese economy, and steadies the ship for the US economy – both of which should be supportive for crude oil demand.'
On the supply front, OPEC+ is set to raise output by 411,000 barrels per day in July, continuing its gradual unwinding of production cuts. Still, analysts say increased domestic demand within the bloc, especially in Saudi Arabia, could cushion any pressure from the additional supply.
Meanwhile, traders are eyeing fresh US inventory data. According to figures from the American Petroleum Institute, US crude stocks fell by 370,000 barrels last week – a signal that demand may be firming as the summer driving season begins.
Markets await the official figures from the US Energy Information Administration later today for confirmation.
Despite some caution in the market, analysts believe the combination of improving trade sentiment, steady demand and controlled supply could support oil prices in the near term.
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