Oil prices rise as U.S.-China trade negotiations progress and soft inflation data bolster market sentiment; the focus shifts to inventory figures.
Brent crude rose above the $68-a-barrel level on renewed optimism surrounding a U.S.-China trade agreement and the release of softer-than-expected U.S. inflation data.
Brent crude climbed 1.9% to $68.16, while WTI advanced 2.3% to $66.46. The rally followed indications of progress on a long-awaited trade framework between the world’s two largest economies. While final approval is still pending from U.S. and Chinese leadership, the proposed deal includes a framework for reciprocal tariffs and agreements on key strategic goods such as rare earth supplies and educational exchanges.
In parallel, U.S. consumer price data for May showed a 2.4% year-over-year increase, aligning with forecasts. Monthly, prices rose 0.1%, below the expected 0.2%, easing concerns that tariffs would trigger a surge in inflationary pressure.
Additional support came from continued dollar softness and preliminary data from the American Petroleum Institute (API) indicating a modest draw in U.S. crude inventories.
Energy analysts noted that short-term production estimates from the U.S. Energy Information Administration (EIA) suggest a decline in crude output by late 2025. However, output is likely to remain stable throughout the summer.
Geopolitical developments also underpinned prices, with markets responding to the lack of progress in U.S.-Iran nuclear talks, which added to broader supply risk sentiment.
Traders are now awaiting the release of official EIA inventory figures, expected later Wednesday, for confirmation of domestic demand trends. Early reports suggest a weekly draw of approximately 370,000 barrels.
While the outlook remains cautiously bullish, markets continue to weigh potential volatility stemming from OPEC+ supply changes, macroeconomic headwinds, and evolving geopolitical dynamics.