Oil Prices Climb Amid US Trade Progress and Falling Crude Inventories

Global oil prices rose by nearly 1 percent on Thursday, lifted by renewed optimism over trade negotiations between the United States and key partners, alongside a sharper-than-expected drop in US crude inventories.

Brent crude futures were up 64 cents, or 0.9 percent, to trade at $69.15 per barrel by 8:30 a.m. Saudi time. Meanwhile, US West Texas Intermediate (WTI) crude gained 68 cents, or 1 percent, reaching $65.93 per barrel.

The gains come as markets reacted positively to signs of progress in US-EU trade talks, following a significant agreement between Washington and Tokyo that reduces auto tariffs and unlocks a $550 billion investment and loan package from Japan to the United States.

“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 cautioned that ongoing uncertainty around US-China relations and the fragile Ukraine-Russia peace talks could keep oil prices in a tight range, predicting WTI would remain between $60 and $70 per barrel.

Diplomats in Europe confirmed that negotiations are underway for a broader trade agreement between the US and the EU. The potential deal could include a 15 percent US tariff baseline on EU goods, with possible exemptions under discussion.

On the supply side, fresh data from the US Energy Information Administration (EIA) revealed that US crude stockpiles fell by 3.2 million barrels last week, surpassing analysts’ expectations of a 1.6 million-barrel draw. Gasoline inventories dropped by 1.7 million barrels, nearly double the forecasted decline, while distillate stocks rose by 2.9 million barrels but remained near their lowest seasonal levels since 1996.

“These figures suggest demand has remained robust through the northern hemisphere summer,” analysts at ANZ noted in a market briefing.

Geopolitical developments continue to weigh on the market. Peace talks between Russia and Ukraine resumed in Istanbul this week, focusing on prisoner exchanges, though a broader ceasefire remains elusive. At the same time, foreign oil tankers were briefly barred from loading at Russia’s main Black Sea ports due to new regulations, disrupting exports from Kazakhstan — a country that relies on a pipeline consortium partially owned by American firms.

Additionally, the US energy secretary confirmed that Washington is weighing new sanctions on Russian oil to intensify pressure on Moscow. Meanwhile, the European Union approved its 18th sanctions package, which includes a further reduction in the price cap for Russian crude exports.

Despite bullish market signals, analysts caution that ongoing geopolitical tensions and fragile trade dynamics could continue to inject volatility into oil markets in the weeks ahead.