Oil gains as US crude inventories drop and trade sentiment improves 

SINGAPORE: Oil prices rose on Thursday, supported by hopes of progress in US trade talks and a sharper-than-expected decline in US crude stockpiles. 

Brent crude rose 24 cents, or 0.4 per cent, to $68.75 a barrel by 0032 GMT, while US West Texas Intermediate (WTI) gained 25 cents to $65.50.  

The gains come after little movement on Wednesday as investors weighed developments in trade negotiations between the US and European Union, following a new tariff agreement with Japan. The Japan deal, which cuts auto tariffs and secures a $550 billion US-bound investment package, has helped calm market nerves. 

“Buying was driven by optimism that progress in tariff negotiations with the US would help avoid a worst-case scenario,” said Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment. However, he added that ongoing uncertainty over US-China trade talks and Russia-Ukraine peace efforts is keeping further gains in check. He expects WTI to remain in the $60–$70 range. 

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Diplomatic sources say the US and EU are nearing a trade agreement that may involve a 15 per cent baseline US tariff on European goods, with some exemptions—potentially setting the stage for another major deal after Japan. 

On the supply front, US crude inventories fell by 3.2 million barrels to 419 million last week, according to the Energy Information Administration—double the drop forecast in a Reuters poll. 

Geopolitical risks remain high. Peace talks between Russia and Ukraine were held in Istanbul, with both sides discussing further prisoner swaps. However, no breakthrough was reported on a ceasefire or a leaders’ summit. 

Meanwhile, exports from Kazakhstan were disrupted after foreign tankers were temporarily barred from loading at Russia’s Black Sea ports under new regulations, according to industry sources. The route is part-owned by US energy firms. 

In response to the conflict, the US energy secretary said Washington is considering sanctions on Russian oil. The European Union, for its part, approved its 18th sanctions package last Friday, which includes a lowered price cap on Russian crude.