West Texas Intermediate (WTI) crude oil prices showed some recovery during Thursday’s Asian session, trading at $58.10 per barrel after recent losses. The rebound was driven by a decline in U.S. crude inventories, as reported in the latest EIA Petroleum Status Report, which revealed a 2.032 million barrel drop in U.S. stockpiles for the week ending May 2.
However, oil prices remain under pressure amid continued uncertainty surrounding U.S.-China trade talks. As the world’s two largest oil consumers, ongoing tensions between the U.S. and China continue to cloud market sentiment. U.S. Treasury Secretary Scott Bessent is scheduled to meet with China’s top economic official in Switzerland on May 10, with hopes to revive stalled negotiations.
U.S. President Donald Trump added to the uncertainty, stating that China initiated the trade talks and reaffirmed his unwillingness to reduce the 145% tariffs imposed on Chinese goods to facilitate progress. Bessent tempered expectations, describing the meeting as an initial step rather than a significant breakthrough in negotiations.
Despite both sides expressing a willingness to engage—acknowledged by China’s Ministry of Commerce—investors remain cautious. The protracted trade conflict threatens to dampen global oil demand, with Brent crude edging higher on optimism about potential progress in the talks. However, ING analysts Ewa Manthey and Warren Patterson cautioned that any meaningful recovery in oil demand hinges on tangible progress regarding tariff reductions.
Further compounding market concerns, Federal Reserve Chair Jerome Powell warned that prolonged tariff policies could obstruct the Fed’s inflation and employment targets. Powell’s comments highlighted ongoing uncertainty over U.S. trade policy, signaling a cautious approach to future interest rate decisions. While the Fed sees no immediate need for rate cuts unless economic conditions worsen, the uncertainty surrounding trade tensions continues to weigh on business and consumer confidence, undermining the broader economic outlook.
