Oil prices rose on Thursday after a heavy sell-off pushed the market to its lowest level in years. However, uncertainty over tariffs and expectations of increased supplies limited the gains.
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Brent crude futures rose by 50 cents, or 0.72%, to $69.80 per barrel by 07:16 GMT, while U.S. West Texas Intermediate (WTI) crude futures increased by 48 cents, or 0.72%, to $66.79 per barrel.
Brent crude had dropped by 6.5% over the previous four sessions, reaching its lowest level since December 2021 on Wednesday. WTI crude also fell by 5.8% during the same period, marking its lowest level since May 2023.
"The sharp drop in oil prices below the $70.00 mark could lead to a short-term break in today’s session, as technical conditions try to stabilize from the oversold region," said Yiap John Rong, a market strategist at IG trading platform.
However, he added, "The recovery momentum remains fragile, as the unfavorable supply and demand dynamics continue to weigh on bullish sentiment."
This decline followed the United States' imposition of tariffs on Canadian and Mexican goods, including energy imports, coupled with a decision by major producers to raise production quotas for the first time since 2022.
But the losses were mitigated after the U.S. announced it would exempt car companies from the 25% tariffs, increasing optimism that the impact of the trade dispute could be limited.
Additionally, a source familiar with the discussions stated that U.S. President Donald Trump might cancel the 10% tariff on Canadian energy imports, such as crude oil and gasoline, which are in compliance with existing trade agreements.
Daniel Hynes, Senior Commodity Strategist at ANZ Bank, stated in a note on Thursday: "Trump’s trade actions threaten to reduce global energy demand and disrupt trade flows in the global oil market. This has been exacerbated by rising U.S. inventories."
Market sentiment remains negative due to the combined impact of the tariffs and the decision by the OPEC+ alliance, which includes OPEC and its allies, including Russia, to increase production.
U.S. crude oil inventories, the world’s largest consumer of oil, rose more than expected last week amid seasonal refinery maintenance, while gasoline and distillate stocks fell due to higher exports, according to the U.S. Energy Information Administration (EIA) on Wednesday.
Crude inventories increased by 3.6 million barrels to 433.8 million barrels last week, far exceeding analysts' expectations in a Reuters survey, which had forecasted a rise of only 341,000 barrels.
There are also other signs of weak U.S. oil demand, as U.S. imports of seaborne crude oil fell to their lowest level in four years in February, due to a drop in Canadian shipments to the East Coast, according to vessel-tracking data.
Tariffs are still in place on Mexican crude imports to the U.S., which is a smaller oil flow compared to Canadian imports, but it remains a key source for U.S. refineries on the Gulf Coast. - Agencies
