Crude oil prices saw a modest rebound on Thursday, stabilizing after Brent crude hit a multi-year low of $68.33. However, Brent crude remained below $70 a barrel, under the pressure of ongoing trade tariffs between major economies and OPEC+’s decision to raise production quotas.
Brent rose, while WTI gained gains. The recovery came on the heels of the U.S. government’s decision to exempt automakers from some tariffs, providing some relief to energy markets. However, traders remain cautious as geopolitical and economic factors continue to put pressure on the market.
Rising U.S. inventories and trade tariffs add downward pressure
The latest Energy Information Administration data showed that U.S. crude inventories rose by 3.6 million barrels, beating expectations. The rise was driven by seasonal refinery maintenance, which reduced crude processing rates. Refineries operated at 85.9% of capacity, down from the previous week.
Gasoline and distillate fuel inventories fell by 1.4 million barrels and 1.3 million barrels, respectively, largely due to increased exports. Meanwhile, overall commercial petroleum inventories fell by 4.6 million barrels, suggesting some tightening in the supply of refined products.
U.S. tariffs on Canadian and Mexican energy imports continue to disrupt trade flows. While there are reports that the 10% tariff on Canadian crude could be raised, uncertainty over Mexican imports remains. This could strain Gulf Coast refineries that rely on Mexican crude for mixing.
OPEC+ supply increases meet weak demand signals
The OPEC+ alliance decided to increase production quotas for the first time since 2022, adding further downward pressure to prices. While the group did not specify the size of the production increase, the move reflects confidence in supply flexibility despite demand risks.
Oil prices stabilize amid multiple economic pressures
Oil prices steadied on Thursday, having recovered slightly from multi-year lows, although Brent crude remains below $70 under pressure from tariffs between the United States, Canada, Mexico and China and OPEC+ plans to increase output.
Those factors and a larger-than-expected increase in U.S. crude inventories pushed Brent crude to $68.33 on Wednesday, its lowest level since December 2021. Brent crude futures were up 28 cents, or 0.4%, at $69.58 a barrel by 0957 GMT on Thursday, while U.S. West Texas Intermediate crude futures were up 32 cents, or 0.5%, at $66.63.
“It seems that the intention of the US president is to lower the price of oil,” said John Evans of oil broker BVM, adding that there were questions about whether crude was oversold, Reuters reported.
Prices fell after the United States imposed tariffs on Canadian and Mexican goods, including energy imports, as major producers decided to raise production quotas for the first time since 2022.
Oil recovered and stabilized somewhat after the U.S. said it would exempt automakers from the 25% tariffs.
A SOURCE FAMILIAR WITH THE DISCUSSIONS SAID U.S. President Donald Trump may scrap 10% tariffs on Canadian energy imports, such as crude oil and gasoline, that comply with existing trade agreements.
Daniel Haynes, commodities strategist at ANZ, said in a note: “Trump’s trade measures threaten to reduce global energy demand and disrupt trade flows in the global oil market.”
The OPEC+ producer group, which includes the Organization of the Petroleum Exporting Countries and allies including Russia, decided on Monday to increase production for the first time since 2022.
U.S. Oil Inventories Rise Amid Weak Demand
U.S. Energy Information Administration said on Wednesday that crude inventories in the United States, the world’s biggest oil consumer, rose more than expected last week, supported by seasonal maintenance work at refineries, while gasoline and distillate inventories fell due to higher exports.
There are further signs of weakness in U.S. oil demand, with crude oil imports transported through U.S. waters falling to a four-year low in February, driven by a drop in Canadian barrels shipped to the East Coast, according to ship-tracking data. Demand was weak due to refinery maintenance work including a long turnaround at the region’s largest plant.
The tariffs also remain in place on U.S. imports of Mexican crude, a smaller supply stream than Canadian crude but important for U.S. refiners on the Gulf Coast.
Meanwhile, Chinese officials have signaled that more stimulus could be offered if economic growth slows, seeking to support consumption and mitigate the impact of the escalating trade war with the United States.
Market Outlook: Downside Bias Persists in the Short Term
Crude oil prices may face sustained downward pressure as growing uncertainty over tariffs, rising U.S. inventories, and increased OPEC+ production weigh on sentiment. While the market has shown resilience with a moderate recovery, demand concerns – especially in the US and China – point to a limited near-term rally.
Traders will be closely watching possible tariff adjustments and Chinese economic measures for any signs of demand recovery. Until then, oil prices remain vulnerable to further declines, and Brent crude is likely to struggle to break the $70 level in the near future.
