Oil prices advanced on Wednesday as market sentiment improved on signs of rising consumer demand in China and a notable drawdown in U.S. crude stockpiles.
The gains come after a recent slump that saw both Brent and West Texas Intermediate (WTI) crude benchmarks touch four-year lows due to oversupply concerns and weak macroeconomic outlook.
Brent crude oil, against which Nigerian oil is priced, rose by 73 cents or 1.2 percent to $62.88 per barrel while the U.S. West Texas Intermediate (WTI) gained 81 cents or 1.4 percent to settle at $59.90 as of 07:50 a.m. Nigerian time.
The rebound follows sharp declines triggered by OPEC+’s recent decision to accelerate output increases, stoking fears of a supply glut amid fragile global demand.
Market sentiment was supported by fresh data from the American Petroleum Institute (API), which showed U.S. crude inventories declined by 4.5 million barrels in the week ended May 2.
Analysts had projected a smaller drop of 800,000 barrels, according to a Reuters poll.
Several U.S. shale producers, including Diamondback Energy and Coterra Energy, have announced rig reductions in response to depressed prices and rising expectations of a gradual tightening in supply over the coming months.
“The recent announcements suggest that U.S. output may soften in the near term,” said Daniel Hynes, Senior Commodity Strategist at ANZ Bank. “Falling prices and reduced drilling activity are starting to reflect in production expectations.”
Demand-side indicators also contributed to Wednesday’s recovery as Chinese consumer activity showed improvement during the May Day holiday with spending patterns rebounding as markets reopened following the five-day celebration.
This raised optimism over Asia’s largest economy, which remains a critical anchor for global crude demand.
Meanwhile, markets were also reacting to news that the United States and China will resume trade discussions this weekend. The move sparked a modest relief rally, although analysts cautioned that sustained price recovery will require tangible progress on tariff reductions to materially shift demand fundamentals.
“Trade negotiations are supportive in the short term, but for oil demand to recover meaningfully, we need a reduction in trade barriers,” said ING analysts in a research note.
In Europe, first-quarter earnings guidance from several firms has also improved, suggesting better-than-expected industrial performance. Companies are now projected to post 0.4 percent growth, reversing earlier estimates of a 1.7 percent contraction.
Despite Wednesday’s gains, oil remains under pressure from persistent macroeconomic headwinds and surplus supply forecasts. Market participants will be closely monitoring upcoming economic data and policy signals for direction, particularly from OPEC+ and the Federal Reserve.
With U.S. inflation data, Chinese trade figures, and global central bank commentary all expected in the coming days, volatility in crude markets is likely to remain elevated in the short term.
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