Oil prices edged lower on Wednesday as investors braced for a possible surge in U.S. crude inventories.
Despite the dip, prices remained close to recent highs following a temporary pause in the U.S.-China trade war that eased fears of weakening global demand.
Brent crude futures slipped 32 cents, or 0.5%, to $66.31 a barrel by 0700 GMT. U.S. West Texas Intermediate (WTI) also dropped 32 cents to $63.35. Both benchmarks had rallied over 2.5% in Tuesday’s session.
The cautious optimism comes after the United States and China, the world’s two largest economies, agreed to suspend mutual tariffs for 90 days. Washington slashed tariffs on Chinese goods to 30% from 145%, while Beijing cut its duties on U.S. imports to 10% from 125%.
For oil markets, the truce provided a short-term lift. “The U.S.-China economic pause might have crafted a narrative that could invigorate demand amidst a backdrop of cautious optimism,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Yet concerns over swelling U.S. crude inventories kept a lid on gains.
According to the American Petroleum Institute, U.S. crude stocks surged by 4.3 million barrels in the week ending May 9—sharply reversing last week’s drawdown. The U.S. Energy Information Administration is set to release official inventory data at 1430 GMT.
“This sharp contrast to last week’s substantial draw signals that the demand side is still grappling with significant challenges,” added Sachdeva.
Analysts at Rystad Energy noted that the tariff rollback had “eroded some demand-side pessimism,” but warned that lingering geopolitical tensions could continue to pressure market sentiment.
Eyes are also on President Donald Trump’s ongoing Gulf tour. Speaking at an investment summit in Riyadh, Trump announced plans to lift longstanding sanctions on Syria and claimed a $600 billion Saudi investment pledge. His administration also hinted at boosting purchases of Middle Eastern crude for the Strategic Petroleum Reserve while prices are relatively low.
“Preventing a summer spike in oil prices will be central to the president’s agenda on this trip,” said Mukesh Sahdev, global head of commodity markets at Rystad Energy.
Meanwhile, geopolitical tensions resurfaced as the U.S. imposed fresh sanctions on roughly 20 companies. Washington accused them of aiding Iran’s military and its front company, Sepehr Energy, in shipping oil to China. The move follows a fourth round of indirect U.S.-Iran nuclear talks in Oman.
Sahdev noted that future U.S. moves involving Iran, Russia, or Venezuela remain a wildcard for global supply. “The big unknown for the market is how U.S. actions related to Iran, Russia and Venezuela will result in supply disruptions or additions,” he said.
With global demand still uncertain and inventories climbing, traders remain on edge, watching for the next headline that could swing sentiment.
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