Oil prices rise on Trump tariff block, tighter supply bets

Oil prices rose on Thursday, supported by a U.S. court ruling against President Trump's proposed tariffs, anticipation of unchanged OPEC+ output, and a larger-than-expected 4.24 million barrel drawdown in U.S. oil inventories reported by the API. Brent crude futures increased 1% to $65.55 a barrel, while WTI rose 1.1% to $62.51 a barrel, though prices remain down for 2025 amid concerns about weak demand and slowing economic growth; the market now awaits official U.S. inventory data and the upcoming OPEC+ decision on July production.

Analysis

Oil prices experienced a notable uptick in Asian trading, with Brent futures rising 1% to $65.55 per barrel and West Texas Intermediate crude increasing 1.1% to $62.51 per barrel. This positive momentum was primarily driven by an improved market sentiment following a U.S. federal court ruling that blocked President Trump's proposed reciprocal trade tariffs, alleviating some concerns about their potential negative impact on global oil demand. Further support for prices came from OPEC+ maintaining its current output quotas, contrary to some market expectations for an increase, and signs of a substantial 4.24 million barrel drawdown in U.S. crude inventories reported by the American Petroleum Institute, which significantly exceeded expectations of a 1 million barrel build and suggested robust domestic demand. Geopolitical factors, including a recent Russian attack on Ukraine and restrictions on Chevron's Venezuelan crude exports, also contributed to expectations of tighter supplies. However, despite these short-term bullish catalysts, oil prices remain significantly lower year-to-date in 2025, weighed down by persistent concerns over weak global demand and slowing economic growth, underscored by preliminary data indicating a 0.3% contraction in U.S. Q1 GDP. The market now awaits official U.S. government inventory data and the forthcoming OPEC+ decision on July production levels, while the tariff situation remains fluid, with a potential White House appeal adding a layer of uncertainty.

Key Decisions for Investors

• Investors should closely monitor upcoming official U.S. inventory data, the OPEC+ July production decision, and revised U.S. Q1 GDP figures, as these will be critical in determining near-term price direction amidst conflicting market signals.
• Positions should account for potential renewed volatility stemming from the U.S. trade tariff situation, particularly if the White House appeals the recent court ruling blocking the proposed tariffs, which could reintroduce uncertainty despite the current boost to sentiment.
• While current supply-side factors such as OPEC+ discipline and inventory drawdowns are supportive of prices, the underlying concerns of weak global demand and slowing economic growth warrant caution and could cap further upside or reverse recent gains.