While a modest U.S.-Japan trade agreement provided brief optimism, the broader trade uncertainty kept crude prices under pressure for most of the week.
Last week, Light Crude Oil futures settled at $65.16, down $0.89 or -1.35%.
The European Union’s retaliatory stance, proposing tariffs on $109 billion worth of U.S. goods, only amplified market concerns. Traders are increasingly focused on whether these trade disputes will materially impact global energy consumption, particularly as both OPEC and the IEA have already dialed back their 2025 demand growth forecasts.
Inventory Draws Provide Welcome Relief to Bulls
A significant bright spot emerged midweek when the Energy Information Administration reported a larger-than-expected 3.2 million barrel draw in U.S. crude inventories, more than double analyst forecasts. This bullish surprise helped stabilize prices and reminded traders that underlying fundamentals remain supportive despite macro headwinds.
The inventory decline, coupled with continued strength in distillate margins, provided crucial support during the week’s most challenging sessions. Asian crude imports have also defied pessimistic forecasts, with China and India leading a 510,000 barrel per day increase in the first half of 2025, driven by opportunistic buying at softer price levels.
Supply Disruptions Add Geopolitical Premium
Multiple supply hiccups kept traders on edge throughout the week. Azerbaijan’s BTC crude loadings faced contamination-related delays at Turkey’s Ceyhan port, while Russia temporarily halted operations at key Black Sea terminals. Though these disruptions were ultimately resolved, they highlighted the market’s ongoing sensitivity to export bottlenecks.
