Oil extends gains but remains below $70 per barrel

WTI crude oil futures extended gains toward $67 per barrel on Wednesday, buoyed by a weaker U.S. dollar and adjusted global oversupply forecasts. The U.S. Energy Information Administration (EIA) revised down its surplus projections for the year, noting a reduced supply glut in 2026 due to potential declines in Iranian and Venezuelan oil production.

Oil extends gains but remains below $70 per barrel

These revisions provided some support to oil prices, suggesting a tightening market in the medium term. However, despite these optimistic supply adjustments, oil prices remained relatively close to multi-year lows, weighed down by broader market factors. A major headwind for oil prices came from the erratic shifts in U.S. trade policy, which have contributed to prolonged declines in risk assets. The ongoing uncertainty surrounding U.S. tariffs and potential economic repercussions from a trade-induced slowdown fueled fears that global oil demand could falter. As investors continue to grapple with concerns about the impact of tariffs on the global economy, sentiment around risk-sensitive assets, including crude oil, has remained subdued. Further complicating the outlook for oil markets are expectations of an impending OPEC+ output hike. As the group prepares to increase production, concerns over rising supply levels, especially from Russia, added additional pressure on oil prices. The situation was further complicated by recent developments in Ukraine, where Kyiv agreed to a 30-day ceasefire with Russia, raising expectations that Russian oil exports might rise in the near future, potentially exacerbating the supply glut.

U.S. crude inventories rose

Meanwhile, API data released late Tuesday showed that U.S. crude inventories rose by 4.2 million barrels last week, surpassing the expected 2.1 million-barrel build and adding to concerns over persistent oversupply in the market. This build in U.S. crude stocks, while not entirely unexpected, further pressured prices, signaling that despite supply adjustments from major producers, global stockpiles remain high. In the short term, oil markets will likely continue to be influenced by geopolitical developments, including the ongoing trade disputes and any changes in the supply-demand balance from key producers. Investors will also be keeping a close eye on the next round of data releases, including EIA inventory figures, to gauge the true impact of the rising U.S. crude stocks on market sentiment and oil prices.