Investing.com-- Oil prices rose Thursday after sharp declines overnight as traders cautiously assessed escalating US-China trade tensions, while data showing higher US crude stockpiles reflected weak demand.
At 09:10 ET (14:10 GMT), Brent Oil Futures rose 0.7% to $75.16 a barrel, while Crude Oil WTI Futures expiring in March ticked up 0.8% to $71.61 a barrel.
Sentiment has been boosted Thursday after Saudi Aramco (TADAWUL:2222), the world’s leading oil exporter, detailed a sharp increase in prices for Asian buyers.
"This ties in with the strength that we have seen in the Middle East physical market since the start of the year," said analysts at ING, in a note.
"Aramco’s flagship Arab Light into Asia was increased by US$2.40/bbl to US$3.90/bbl over the benchmark – the highest level since December 2023. It is also the largest monthly increase since August 2022."
US crude inventories surge, indicates softening demand
Both contracts fell more than 2% at settlement on Wednesday, pressured by a surge in US crude inventories reported by the Energy Information Administration, the largest weekly build since November 2024.
For the week ending Jan. 31, US commercial crude oil stocks rose by 8.7 million barrels, surpassing analysts’ expectations of a 2.4 million barrel increase.
This substantial build in inventories suggests a potential softening in demand for crude oil. Typically, higher inventories indicate that supply is outpacing consumption, which can exert downward pressure on oil prices.
The recent data aligns with this trend, as oil prices have experienced declines, reaching their lowest settlement prices of the year on Wednesday.
Further insights from the report show that gasoline supplies also increased, while distillate stocks declined. This scenario is indicative of a broader trend of sluggish consumption in the petroleum sector.
Tariff turmoil dents demand outlook
The White House’s 10% tariff on Chinese goods and Beijing’s retaliatory duties on US energy imports deepened fears of a trade war that could sap global oil demand.
China’s tariffs specifically target US crude, LNG, and coal, threatening to disrupt flows of American oil that averaged 1 million barrels per day in recent months.
Notably, the U.S. has reinstated a stringent policy on Iran, aiming to reduce its oil exports to zero. While this move has the potential to tighten global supply, its impact has been moderated by the prevailing concerns over demand.
Analysts suggest that the current volatility in oil prices reflects a complex interplay between supply-side constraints and demand-side uncertainties.
(Ayushman Ojha contributed to this article.)