West Texas Intermediate (WTI) crude oil is trading around $63.25 during Wednesday’s Asian session, extending its gains as easing trade tensions between the United States and China alleviate concerns over a potential global recession.
Over the weekend, the two economic giants reached a landmark agreement in Switzerland to significantly reduce tariffs. U.S. President Donald Trump committed to slashing additional tariffs on Chinese goods from 145% to 30%, while China agreed to cut its tariffs on U.S. imports from 125% to 10%. The revised rates will be in effect for 90 days, marking a temporary but impactful de-escalation in trade hostilities. Given that the U.S. and China are the world’s two largest oil consumers, the tariff reductions are expected to support crude demand and boost WTI prices in the near term.
However, gains in crude prices are facing headwinds from bearish supply-side data. According to the American Petroleum Institute (API), U.S. crude oil inventories rose by 4.287 million barrels for the week ending May 9. This contrasts sharply with the prior week’s draw of 4.49 million barrels and defies market expectations for a 2.4 million barrel decrease, signaling a potential supply glut.
Adding further pressure to the market, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are set to increase oil exports through May and June. OPEC output has already exceeded previous forecasts since April, with production expected to rise by 411,000 barrels per day in May alone. This supply expansion may limit the upside potential for crude prices, even as geopolitical developments offer temporary support.
In the coming weeks, oil traders will be closely monitoring inventory trends and OPEC+ output, alongside any further developments in U.S.-China trade relations, to gauge the direction of WTI and broader energy markets.
