Oil prices rise as strong economic data, easing trade tensions boost sentiment

SINGAPORE: Oil prices edged higher in early trading on Thursday, recovering from the previous session’s losses, as encouraging economic indicators from the US and China and signs of reduced trade friction supported market sentiment.

By 0000 GMT, Brent crude futures had gained 27 cents, or 0.39 per cent, to reach $68.79 a barrel, while US West Texas Intermediate (WTI) crude futures rose by 31 cents, or 0.47 per cent, to $66.69. Both benchmarks had slipped by over 0.2 per cent in the prior session.

The rebound came after fresh data showed a larger-than-expected drop in US crude inventories. According to the Energy Information Administration, stockpiles fell by 3.9 million barrels to 422.2 million barrels last week, far exceeding analysts’ forecasts of a 552,000-barrel draw. The sharper decline points to increased refinery activity and stronger fuel demand.

John Paisie, president of Stratas Advisors, noted that refiners continue to benefit from healthy profit margins. “Product spreads remain relatively wide in all regions,” he said, adding that this has provided further support to crude prices.

Meanwhile, China’s crude oil throughput in June rose 8.5 per cent compared to the same period last year, signalling a pickup in fuel consumption.

Market sentiment also improved following reports of easing trade tensions. US President Donald Trump lifted restrictions on the sale of AI chips to China and announced a trade agreement with Indonesia. He also expressed optimism about potential deals with India and Europe and mentioned progress in talks with Beijing on controlling illicit drug flows.

However, analysts warned that ongoing concerns about tariffs still pose a threat to global economic growth and could weigh on future oil demand.

Read next: Oil prices edge higher on signs of steady demand in US, China