Oil prices rose on Wednesday, recovering some recent losses after industry data revealed a surprising draw in U.S. oil inventories. However, prices have been struggling with a drop to two-month lows this week, amid increasing worries that a slowdown in global economic growth will negatively impact oil demand in the upcoming months.
Sentiment shifts due to trade tariffs
The sentiment surrounding crude was further affected by the possibility of additional U.S. trade tariffs, as President Donald Trump continues to issue threats. Brent oil futures set to expire in April increased by 0.3 percent to $73.27 a barrel, while West Texas Intermediate (WTI) crude futures climbed 0.4 percent to $69.17 a barrel by 20:38 ET (01:38 GMT). Both contracts lost approximately $2 on Tuesday, following disappointing economic data from the U.S. and Germany.
US oil inventories clock small weekly draw- API
Data released by the American Petroleum Institute on Tuesday evening indicated that U.S. oil inventories decreased by 0.6 million barrels in the week ending February 21, contrary to expectations for an increase of 2.3 million barrels. This figure typically precedes a similar result from official inventory data, which is expected later on Wednesday. The unexpected draw has sparked some optimism for tighter U.S. supplies in the near term.
The API data provided a measure of relief to oil prices, even as they have been facing substantial losses so far in 2024 due to rising supply and weakening demand.
Trump tariff threats, economic jitters rattle oil
Oil prices have been reeling from a decline to two-month lows, spurred by weak economic indicators from the U.S. and Germany, which have heightened concerns over diminishing demand. U.S. consumer confidence appears to have declined in February, intensifying worries about a slowdown in private spending, a vital driver of the economy.
This data follows indications of a sustained contraction in Germany’s gross domestic product, as Europe’s largest economy continues to cool. Traders are also contending with the threats of more trade tariffs under Trump, which could destabilize global trade and negatively influence the economy, subsequently impacting oil demand.
China, a major oil importer, has been a primary target of Trump’s tariffs, which could pressure the nation’s economy and reduce its demand for crude. This week, Trump highlighted potential tariffs on copper and announced that his tariffs on Mexico and Canada are set to take effect next week.
Focus on upcoming economic cues
Attention this week is also directed toward additional economic indicators, with U.S. fourth-quarter GDP data scheduled for release on Thursday. The PCE price index data—the Federal Reserve’s preferred measure of inflation—is due on Friday, along with German inflation data.
