Oil prices advanced modestly for a second consecutive session on Wednesday, supported by easing concerns over U.S.-China trade tensions and signs that U.S. shale production may be plateauing.
Brent crude rose by $0.34 (0.6%) to $62.49 per barrel, while West Texas Intermediate (WTI) gained $0.44 (0.7%) to $59.53 as of 12:20 GMT.
This modest rebound follows a sharp decline earlier in the week, when OPEC+ announced an accelerated return of supply, sending prices to four-year lows. However, optimism surrounding high-level U.S.-China trade talks scheduled in Switzerland has helped restore some investor confidence.
Analysts see these talks as a potential turning point:
- The U.S. and China have both imposed tariffs exceeding 100%, straining global trade.
- A diplomatic breakthrough could stabilize demand forecasts for crude.
- The market views renewed dialogue as an initial step toward easing long-term tensions.
U.S. Shale Output Shows Signs of Peaking
Beyond trade, another key factor behind the oil market’s resilience is emerging evidence that U.S. shale producers may be scaling back. Several companies have signaled reduced capital expenditure, suggesting that the recent production boom could be slowing.
According to Saxo Bank’s Ole Hansen, the price bounce also reflects expectations that OPEC+’s supply increase was already priced in by the time of announcement. Meanwhile, SEB’s Bjarne Schieldrop noted that hopes tied to trade talks are driving much of the recovery, even as supply-side concerns linger.
Market dynamics suggest:
- U.S. production growth may flatten or decline in the second half of 2025.
- Lower investment in new wells is tightening future supply forecasts.
- This trend may balance the faster-than-expected return of OPEC+ barrels.
Inventory Data and Volatility Still Key
Despite the bullish indicators, analysts warn that volatility remains elevated, with U.S. policy unpredictability and fast-moving OPEC+ decisions clouding visibility.
Brokerage PVM’s Tamas Varga cautioned that any upside may be limited, as supply from OPEC+ nations ramps up more quickly than initially expected.
Traders are also closely watching U.S. inventory data:
- API data on Tuesday showed a 4.5 million-barrel drop in U.S. crude stocks.
- The EIA report due at 14:30 GMT is forecast to show an 800,000-barrel decline.
A sharper-than-expected draw could further support prices in the short term, particularly if coupled with improved trade dialogue and slowing U.S. output growth.