Oil prices posted modest gains in early Asia trade on Thursday, recovering from a multi-day slump as a sharper-than-expected draw in U.S. crude inventories revived bullish sentiment. However, concerns over potential disruptions to global trade flows ahead of an approaching tariff deadline kept traders cautious.
EIA Inventory Report Lifts Oil Prices
The U.S. Energy Information Administration reported a substantial 3.17 million-barrel decline in commercial crude inventories for the week ending July 19—nearly double analyst expectations. This drawdown comes amid heightened refinery activity and resilient export levels, signaling sustained domestic and international demand.
The decline leaves crude stockpiles about 9% below the five-year seasonal average, tightening the supply-demand balance and supporting a bullish case for oil. Gasoline inventories also fell by 1.7 million barrels, exceeding forecasts, while distillate fuels saw a seasonal restocking increase of 2.9 million barrels.
Oil Prices Inch Higher
At the time of writing, WTI Crude was up 0.29% at $65.44, while Brent Crude rose 0.25% to $68.68. These upticks offer a break from four straight days of losses, but they remain modest amid wider market uncertainty.
While the inventory report helped stabilize sentiment, oil futures continue to trade within a narrow range as investors weigh macroeconomic risks.
Global Trade Outlook Remains a Key Driver
Markets are closely monitoring trade developments as President Trump’s August 1 tariff deadline looms. A newly announced agreement between the U.S. and Japan brought some optimism: the deal includes a scaled-back 15% tariff and promises $550 billion in Japanese investment, opening doors for U.S. agricultural, automotive, and energy exports.
Yet, concerns persist about other trade relationships. The European Union’s signal that it may implement retaliatory tariffs has added a layer of uncertainty, although the two economic giants are reportedly nearing a deal. Traders are wary that unresolved disputes could dampen economic growth and oil demand in the second half of the year.
Supply Tightness and Demand Risk Keep Oil Prices Rangebound
With inventories tightening and U.S. exports holding firm, supply-side fundamentals remain supportive of prices. But the risk of demand erosion from global trade headwinds keeps the market hesitant.
Unless major trade breakthroughs are achieved or geopolitical tensions flare, crude prices may struggle to break out of their current range. The next few days of negotiations could prove pivotal in determining oil’s near-term trajectory.
By Michael Kern for Oilprice.com
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