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Oil prices inched up on Thursday, recouping a portion of the losses from the prior session, as markets found some support from renewed hopes of progress in U.S.-China trade negotiations. However, gains were capped by persistent concerns over global demand and rising inventories.
Brent crude futures rose by 10 cents, or 0.2%, to $61.22 a barrel, while West Texas Intermediate (WTI) crude climbed 13 cents, or 0.2%, to $58.20 a barrel as of 06:32 GMT. Both benchmarks had lost over $1 on Wednesday, driven by weakening sentiment over energy demand.
U.S.-China Trade Talks in Focus
Oil traders found some optimism after the U.S. Treasury Department confirmed that Secretary Scott Bessent will meet China’s top economic official on May 10 in Switzerland. The talks represent the first formal engagement between the two economic superpowers in weeks, following an escalation in trade tensions that have rattled global markets.
U.S. President Donald Trump said on Wednesday that the talks were initiated by China, but he reiterated that he would not consider lifting existing tariffs as a precondition for negotiations. Treasury Secretary Bessent described the meeting as a “starting point” rather than a sign of any advanced negotiations.
Given that the U.S. and China are the world’s two largest oil consumers, progress in resolving their trade dispute is seen as critical to restoring confidence in global demand growth.
Fed Caution and Demand Headwinds Weigh on Sentiment
Despite the modest rebound, oil’s upside was limited by mounting concerns over demand. The Federal Reserve on Wednesday held interest rates steady, as expected, but flagged heightened uncertainty around the U.S. economic outlook due to ongoing trade disruptions. This cautious tone reinforced market concerns that slowing global growth could weigh heavily on energy consumption.
Additionally, a stronger U.S. dollar—buoyed by the Fed’s messaging—further pressured oil by making dollar-denominated crude more expensive for buyers using other currencies.
Inventories and Supply Outlook Add Pressure
U.S. gasoline inventories unexpectedly rose last week, raising fresh questions about domestic demand, particularly with the summer driving season approaching. Analysts noted that consumption trends are not yet aligning with seasonal expectations.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) remain on track to raise oil production, as part of previously agreed plans to unwind output cuts. The anticipated increase in supply could further weigh on prices if demand continues to falter.
With trade diplomacy and inventory dynamics in sharp focus, market participants are expected to remain cautious until firmer signals of demand recovery or geopolitical breakthroughs emerge.
