Oil gains on demand optimism

Brent crude oil futures rose toward $69 per barrel on Thursday, snapping a three-day losing streak as optimism grew around the global demand outlook, supported by upbeat economic data from major oil consumers and signs of easing trade tensions.

In the United States, recent economic indicators pointed to improving activity in key sectors such as manufacturing and services, providing a boost to energy demand expectations. However, the overall outlook remained neutral to slightly cautious, as tariff-driven price pressures continue to cloud the macroeconomic environment and may dampen consumer spending and industrial output in the near term.

China, the world’s second-largest oil consumer, contributed positively to the demand picture with second-quarter GDP growth slowing less than expected. This resilience was partly attributed to front-loading activity ahead of the US tariffs, as companies accelerated purchases to mitigate potential cost increases. Reflecting this, China’s crude oil throughput in June rose by 8.5% year-on-year, underscoring robust refining activity despite broader global uncertainties.

Further bolstering sentiment, the US Energy Information Administration (EIA) reported a notable 3.9 million barrel decline in US crude inventories, signaling sustained drawdowns that often accompany rising consumption or reduced production. However, gains were tempered somewhat by larger-than-anticipated builds in gasoline and diesel stocks, which suggested some regional supply gluts and potential demand softness in transport fuels.

Trade developments also played a key role in supporting prices. Easing tensions between the US and China, including the lifting of the AI chip export ban and the signing of a trade deal with Indonesia, helped reduce fears of escalating trade conflicts that could disrupt global supply chains and energy demand. Additionally, President Trump expressed optimism regarding potential new trade agreements with India and Europe, fueling hopes that broader trade stability could be on the horizon.

Despite these positive developments, market participants remain cautious, mindful that tariff-related risks continue to pose a threat to global demand growth. Any resurgence in protectionist measures or geopolitical tensions could quickly reverse the recent gains, keeping crude oil markets on alert.