Oil Prices Rise on Surprise U.S. Crude Draw, But Trade Tensions Keep Gains in Check

Highlights:

• U.S. crude inventories fell 3.17 million barrels, beating forecasts and lifting oil prices.
• WTI Crude at $65.44 and Brent at $68.68 at the time of writing.
• Trade tensions continue to limit upside as tariff concerns weigh on global demand.

Crude inventories drop sharply, lifting market sentiment

Oil prices rebounded modestly in early Thursday trading after the U.S. Energy Information Administration (EIA) reported a sharper-than-expected drop in crude inventories. At the time of writing, WTI Crude rose 0.29% to $65.44, while Brent Crude edged up 0.25% to $68.68, snapping a four-day losing streak. The EIA data showed a 3.17 million-barrel decline in U.S. commercial crude stocks for the week ending July 19, nearly twice the draw forecasted by analysts. This drop, driven by increased refinery runs and steady export activity, leaves inventories about 9% below the five-year seasonal average—tightening the market’s supply outlook.

Demand signals strengthen as gasoline stocks fall

Gasoline inventories also fell by 1.7 million barrels, reinforcing signs of strong consumer demand amid the summer driving season. Meanwhile, distillate stocks, including diesel and heating oil, rose by 2.9 million barrels—a typical seasonal increase as refiners prepare for cooler months ahead.

The stronger demand indicators provided a much-needed lift to oil prices after recent declines triggered by global economic uncertainties and lackluster macro signals.

Trade developments cap oil price momentum

Despite the inventory-driven boost, gains were limited as markets remained cautious ahead of U.S. trade policy decisions. A partial deal between the U.S. and Japan—including a scaled-back 15% tariff and $550 billion in investment commitments—brought some optimism. However, ongoing friction with the European Union, which has hinted at retaliatory tariffs, continues to cloud the global trade outlook.

At the time of writing, investors remained on edge, with oil futures trading within a narrow range as geopolitical risks and economic uncertainty keep markets on a cautious footing.

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