Oil prices climbed during Asian trading hours on Wednesday, boosted by optimism surrounding a fresh trade agreement between the U.S. and Japan, and further strengthened by data revealing a decline in U.S. crude oil stocks.
At 22:07 ET (02:07 GMT), September Brent crude futures advanced 0.4% to $68.84 per barrel, while West Texas Intermediate (WTI) futures edged up 0.3% to $65.50 per barrel.
After three consecutive sessions of declines amid tensions in U.S.-EU trade relations and growing concern over President Donald Trump’s looming tariff deadline on August 1, oil markets found renewed support.
Trade Deal with Japan Improves Global Growth Prospects
On Tuesday, President Trump revealed that Washington and Tokyo had reached a comprehensive trade deal featuring a 15% tariff on all imported Japanese products — down from an earlier proposed rate of 25%. The deal includes a significant $550 billion Japanese investment into the U.S. economy.
This agreement opens up Japanese markets to U.S. exports such as automobiles, agricultural products, and energy goods, fueling optimism about global trade and demand expansion.
It stands as the most consequential of several trade deals brokered by the White House ahead of the August 1 deadline, when increased tariffs on key trading partners were scheduled to come into effect.
Market participants interpreted the agreement as a positive driver for global economic activity, which usually supports stronger crude demand.
US Crude Inventories Fall After Previous Surge – API
Adding to the positive trade developments, the American Petroleum Institute (API) reported an unexpected reduction of 577,000 barrels in U.S. crude oil inventories for the week ending July 18, reversing a prior build of 19.1 million barrels the week before.
This drawdown suggests a potential recovery in fuel demand during the busy summer travel period.
Gasoline stocks dropped by 1.2 million barrels, whereas distillate inventories—which include diesel and heating oil—increased by roughly 3.48 million barrels.
“This will offer some relief to the middle distillate market, which has been looking increasingly tight,” ING analysts commented in a note.
Investors await official inventory figures from the U.S. Energy Information Administration (EIA), scheduled for release later on Wednesday, closely monitoring for confirmation.
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