At 10:33 GMT, Light Crude Oil Futures are trading $59.48, up $0.39 or +0.66%.
Trade Talks in Focus as Market Weighs Tariffs and Central Bank Policy
Markets are watching closely as U.S. and Chinese officials prepare for high-level trade talks in Switzerland this weekend. This marks a pivotal attempt to ease a trade war that has dampened global demand forecasts. Analysts from SEB and PVM noted that investor sentiment has improved on expectations that the talks could pave the way for reduced tariffs. At the same time, the Federal Reserve is expected to hold rates steady, with no major policy changes anticipated as inflation risks are balanced against slowing growth.
OPEC+ Output Hikes Priced In, but U.S. Shale Cuts Offer Counterweight
Oil’s recent selloff was largely driven by OPEC+’s decision to accelerate production increases for a second consecutive month. However, analysts now believe this move was fully priced in. Adding support to the bullish case, some U.S. producers—like Diamondback Energy and Coterra Energy—are reportedly cutting rigs, signaling potential future declines in shale output. This supply restraint, combined with signs of demand strength from Europe and China, has helped stabilize sentiment.
Crude Inventory Data Expected to Confirm Drawdown
The market is also awaiting official weekly inventory data from the EIA, with expectations for an 800,000-barrel draw in U.S. crude stocks. This would mark the second consecutive weekly decline—a potential sign that the supply-demand balance is beginning to tighten. Preliminary figures from the American Petroleum Institute showed a larger-than-expected 4.5 million barrel drop for the week ended May 2.
Market Outlook: Bullish Bias Strengthens as Value Zone Firms
With positive signals from trade diplomacy, a dovish Fed, signs of U.S. output discipline, and firming technical support, the oil market appears poised for a bullish turn. While volatility is likely to persist, the path of least resistance in the near term is to the upside, with WTI eyeing a breakout above $60.09 if fundamentals continue to support.
More Information in our Economic Calendar.
