WTI crude price rises above $58 as U.S. inventory drop boosts prices
WTI crude gains above $58 as U.S. crude stockpiles fall, but global demand concerns persist
WTI crude oil futures rose above $58 per barrel on Thursday, paring losses from earlier sessions as the market responded to a larger-than-expected drop in U.S. crude inventories. The latest EIA Petroleum Status Report showed a decline of 2.032 million barrels in U.S. stockpiles for the week ending May 2, surpassing the anticipated 1.7 million-barrel draw.
Despite this supportive data, oil prices remain near multi-year lows, with ongoing uncertainty surrounding U.S.-China trade negotiations and plans from OPEC+ to accelerate production increases.
The rebound in oil prices was driven by the inventory data, but concerns about demand persist. As the summer driving season approaches, rising gasoline prices suggest that consumption may not be increasing as hoped. Additionally, the ongoing trade talks between the U.S. and China—the world’s two largest oil consumers—continue to weigh heavily on market sentiment. U.S. Treasury Secretary Scott Bessent is set to meet China’s top economic official in Switzerland on May 10 to attempt to revive the stalled discussions, though both sides have tempered expectations about any significant breakthroughs.
USOIL price dynamics (March 2025 - May 2025) Source: TradingView.
Ongoing trade tensions and Fed caution limit bullish momentum
Despite mutual willingness to engage in talks, the market remains cautious, especially as U.S. President Donald Trump reiterated his unwillingness to reduce tariffs to advance negotiations. U.S. oil prices have been particularly sensitive to the trade war, with uncertainty over tariffs dampening expectations for global oil demand. Federal Reserve Chairman Jerome Powell further fueled caution, signaling that prolonged trade conflicts could hinder the Fed's inflation and employment goals. Powell’s comments reflected broader economic concerns, adding to the volatile environment for oil prices.
As optimism about trade progress wanes, ING analysts Ewa Manthey and Warren Patterson emphasized that meaningful progress on tariff reductions is critical for lifting the demand outlook for oil. While Brent crude saw modest gains, the broader outlook remains tempered by the potential for continued economic uncertainty and the looming impact of higher tariffs.
WTI crude price forecast: Key levels to watch amid volatile market conditions
WTI crude oil prices face resistance at $60 and remain under pressure due to trade uncertainties and OPEC+ plans to ramp up output. While the inventory drop provided short-term relief, a sustained recovery will depend on more significant improvements in global demand and progress in U.S.-China trade talks. A breakout above $60 could pave the way for further upside, but any negative developments in the trade negotiations or from the Federal Reserve could reverse the recent gains and drive prices lower again.
As previously discussed, WTI crude remains at the mercy of trade developments and the broader economic climate. Until more definitive action is seen from global policymakers, oil prices are likely to remain volatile.
