Oil Prices Near Two-Week Highs Amid U.S.-China Trade Deal and Weaker Dollar
Oil prices held steady near two-week highs on Wednesday, supported by a trade agreement between the U.S. and China and a falling U.S. dollar. This agreement temporarily lowers reciprocal tariffs, while a weaker dollar boosts oil demand. As oil prices near two-week highs, market participants are closely watching the impact of these developments on global supply and demand.
Brent Crude and WTI Prices Hold Near Two-Week Highs Despite Minor Declines
Brent crude futures dipped slightly by 0.15% to $66.53 per barrel, and U.S. West Texas Intermediate (WTI) crude fell 0.11% to $63.60. However, both benchmarks had risen over 2.5% in the previous session.
Weaker Dollar Fuels Demand for Oil
The U.S. dollar index dropped 0.67% on Tuesday after U.S. inflation data showed lower-than-expected numbers. A weaker dollar makes oil more affordable for other currencies, stimulating demand.
U.S.-China Trade Agreement Eases Demand Concerns
The U.S. and China announced they would temporarily pause their trade dispute for at least 90 days. As part of the agreement, the U.S. reduced tariffs on Chinese imports from 145% to 30%, while China lowered tariffs on U.S. goods from 125% to 10%.
Analysts Caution on Long-Term Impact of Tariffs
Energy analysts at Rystad Energy noted that the agreement eased some demand concerns but warned that the long-term effects of the tariffs might still be felt.
U.S. Fuel Inventories Decline, Crude Stocks Rise
Oil prices received additional support from a drop in U.S. gasoline and distillate inventories, signaling strong fuel demand. Gasoline stocks fell by 1.4 million barrels, and distillate inventories dropped by 3.7 million barrels. However, crude stocks increased by 4.3 million barrels.
Market Reactions and Forecasts on U.S. Crude Data Amid Oil Prices Near Two-Week Highs
Market expectations had been for gasoline stocks to fall by 600,000 barrels, distillate inventories to rise by 100,000 barrels, and crude stocks to fall by 1.1 million barrels. Official data from the U.S. Energy Information Administration (EIA) is set for release on Wednesday.
U.S. President’s Gulf Visit Sparks Market Interest
The market is closely monitoring President Trump’s ongoing visit to the Gulf. At an investment forum in Riyadh, the president announced that the U.S. would lift long-standing sanctions on Syria and secured a $600 billion investment pledge from Saudi Arabia to the U.S.
Sanctions on Companies Supporting Iranian Oil Exports
On Tuesday, the U.S. imposed sanctions on approximately 20 companies accused of facilitating Iranian oil exports to China. These sanctions followed the fourth round of U.S.-Iran talks in Oman, which focused on Iran’s nuclear program.
