Oil prices hovered near a one-month high on Thursday after a stronger-than-expected draw in U.S. crude inventories signaled tightening supply. However, gains were tempered by renewed trade tensions as President Donald Trump announced a 25% tariff on imported cars and light trucks, set to take effect on April 2.
As of 21:46 ET (01:46 GMT), Brent crude futures for April delivery inched 0.1% higher to $73.84 per barrel, maintaining momentum after reaching a one-month peak of $74.17 in the prior session. Meanwhile, West Texas Intermediate (WTI) crude traded at $69.27 per barrel, having hit its highest level since March 3.
The bullish sentiment was fueled by data from the U.S. Energy Information Administration (EIA), which reported a larger-than-expected decline in crude stockpiles, reinforcing supply concerns.
EIA Reports Steeper-Than-Expected Inventory Draw
The latest EIA Petroleum Status Report, covering the week ending March 21, showed a significant drop in U.S. crude oil inventories:
- Crude stocks fell by 3.3 million barrels to 433.6 million barrels, far exceeding analyst expectations of a 956,000-barrel reduction.
- Gasoline inventories declined by 1.4 million barrels, slightly below forecasts of a 1.8-million-barrel draw.
- Distillate stockpiles, including diesel and heating oil, dropped by 420,000 barrels, missing the expected 1.6 million-barrel draw.
The steep crude drawdown highlights tightening supply conditions, supporting higher oil prices. Additionally, Trump’s recent move to impose sanctions on nations buying Venezuelan oil is raising concerns over potential supply disruptions.
Trump’s Tariffs and Russia-Ukraine Truce Impact Oil
While bullish inventory data supported oil prices, Trump’s latest 25% tariff on imported automobiles and parts has cast uncertainty on demand. The auto sector is a major energy consumer, and higher vehicle costs could curb production, potentially reducing fuel consumption.
Meanwhile, diplomatic tensions in Europe remain unresolved. The U.S. recently brokered an agreement between Ukraine and Russia to halt attacks on energy infrastructure, with Washington advocating for easing some sanctions on Russian agricultural exports.
However, the deal remains fragile. Within hours of the truce, both Russia and Ukraine accused each other of violating the agreement, while the European Union dismissed Russia’s ceasefire conditions in the Black Sea.
As geopolitical risks mount and supply dynamics shift, investors remain watchful of oil price movements, particularly amid policy uncertainties in the U.S. and abroad.