Oil prices snap 3-day losing streak as US crude stockpiles drop

Oil prices rose on Thursday, snapping a three-day losing streak, driven by a larger-than-expected 3.9 million-barrel draw in U.S. crude inventories for the week ending July 11, which signals tightening supply conditions. Brent and WTI futures saw gains of 0.6% and 0.8% respectively. However, investor caution persists due to President Trump's announcement of new global tariff rates, raising concerns that increased trade barriers could dampen future oil demand and broader economic growth.

Analysis

Oil prices have reversed a three-day losing streak, with Brent futures rising 0.6% to $68.94 and WTI crude gaining 0.8% to $66.92, driven by a bullish supply-side signal from the U.S. Energy Information Administration (EIA). For the week ending July 11, 2025, U.S. crude inventories fell by 3.9 million barrels, a drawdown more than double the consensus forecast of 1.8 million barrels, indicating a tighter physical market. This is further supported by high refinery utilization rates of 93.9%. However, this price strength is met with significant investor caution, reflected in the mixed sentiment score. The primary headwind is resurfacing trade concerns, as President Trump signaled new, broad-based tariffs and threatened a 30% tariff on EU imports. This development raises material risk to the global economic outlook and, consequently, future oil demand. The situation is further nuanced by a build in refined product inventories, with gasoline stocks rising 3.4 million barrels and distillates increasing by 4.2 million, which could suggest that end-user demand is not keeping pace with high refinery throughput.

Key Decisions for Investors

• Given the stronger-than-expected crude inventory draw, investors may consider the current price action a fundamentally supported rebound, but should remain aware that prices are capped by macroeconomic risks.
• Closely monitor upcoming announcements on U.S. trade tariffs, as any concrete implementation, particularly against the EU, could trigger a sharp downturn in oil prices by jeopardizing the demand outlook.
• Investors should pay attention to refined product inventory data in subsequent reports, as a continued build in gasoline and distillate stocks could be an early warning sign of weakening consumer and industrial demand, undermining the bullish crude supply narrative.
• A prudent strategy could involve maintaining exposure to energy but hedging against downside risks related to trade policy, given the clear conflict between bullish short-term supply data and bearish forward-looking demand concerns.