Oil prices edged higher on Wednesday, supported by a sharper-than-expected drop in U.S. crude inventories and renewed optimism surrounding an upcoming meeting between the leaders of the United States and China — the world’s two largest energy consumers.
At 07:45 GMT, Brent crude futures rose 22 cents, or 0.34%, to $64.62 per barrel, while U.S. West Texas Intermediate (WTI) gained 20 cents, or 0.33%, to $60.35 per barrel.
China’s Foreign Ministry confirmed that President Xi Jinping will meet U.S. President Donald Trump on Thursday in Busan, South Korea, stating that the discussion would “inject new momentum into the development of U.S.-China relations” and that Beijing was prepared to work with Washington for “positive outcomes.”
Beijing also said it remained open to further cooperation on controlling fentanyl exports, following remarks from Trump that he could reduce tariffs on Chinese goods in exchange for tighter controls on the precursor chemicals used to make the drug.
Meanwhile, data from the American Petroleum Institute (API) showed a notable drawdown in U.S. crude, gasoline, and distillate inventories for the week ending October 24. Crude stockpiles reportedly fell by 4.02 million barrels, gasoline inventories by 6.35 million barrels, and distillates by 4.36 million barrels.
The steeper-than-expected inventory declines prompted a price rally in the previous session and continued to provide support in early Wednesday trading.
“The surprise draws on inventory in the U.S. helped prices this morning, but the interplay of sanctions risks and OPEC+’s posture is driving markets,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“That doesn’t mean the rally has unlimited upside. Because while the sanctions/supply story has been built up, the demand side still shows softness and spare capacity remains,” she added.
Last week, both Brent and WTI posted their largest weekly gains since June after Trump introduced Ukraine-related sanctions on Russia, targeting energy majors Lukoil and Rosneft.
However, lingering doubts over whether sanctions would sufficiently tighten supply — coupled with speculation that OPEC+ could raise output — weighed on prices in the previous session, when both benchmarks slipped by nearly 1.9%, or more than $1 per barrel.
On Tuesday, the Kremlin reiterated that Russia continued to offer “top-quality energy at a good price,” leaving its trade partners free to decide whether to continue purchases following the U.S. measures.
Industry sources said that several Indian refiners have paused new orders for Russian crude pending government guidance, with some turning to the spot market for alternative supplies. Still, state-run Indian Oil affirmed on Tuesday that it “would not stop buying Russian oil as long as it was complying with sanctions.”
Germany’s economy minister said the U.S. government had provided written assurances that Rosneft’s German assets would remain exempt from sanctions, given that the company no longer holds control over them.
Within OPEC+, the world’s leading coalition of oil-producing countries, discussions are reportedly leaning toward a modest output increase in December, with two sources suggesting a possible boost of around 137,000 barrels per day, according to individuals familiar with the matter.
Separately, the CEO of Saudi Aramco noted that global crude demand “was strong even before sanctions were imposed on Russian oil majors” and emphasized that “Chinese demand was still healthy,” reinforcing optimism in the broader energy market.
Leave a Reply