Crude oil prices climbed on Wednesday, driven by a sharper-than-expected decline in U.S. crude inventories and growing expectations of a Federal Reserve interest rate cut—factors that signaled improving demand prospects in the world’s largest economy.
Brent crude rose 0.6% to $67.02 per barrel, up from $66.57 in the previous session, while U.S. West Texas Intermediate (WTI) crude also gained 0.6%, trading at $64.04 per barrel compared to $63.63 previously.
The U.S. Energy Information Administration (EIA) reported a 3 million-barrel drop in commercial crude stocks last week, bringing total inventories to 423.7 million barrels. The decline, which exceeded market expectations of a 200,000-barrel increase, suggests strong demand momentum. Meanwhile, U.S. daily oil output slipped by 30,000 barrels to 13.284 million barrels.
Adding further support to oil prices were renewed hopes of a Fed rate cut. Money market indicators now overwhelmingly point to a possible reduction in September. Lower interest rates tend to weaken the U.S. dollar, making dollar-denominated commodities like crude oil more attractive to foreign buyers.
The dollar index slipped in recent sessions, enhancing oil’s appeal amid a backdrop of strengthening global risk sentiment.
Geopolitical developments also stirred markets. U.S. President Donald Trump signed an executive order imposing a 25% tariff on Indian imports, citing India’s continued oil purchases from Russia. The tariff, set to take effect in 21 days, includes certain exemptions during a transitional period.
Trump warned that other nations continuing crude trade with Moscow may face similar penalties. The move raised concerns about possible disruptions to global oil supply, given Russia’s position as the world’s second-largest producer.
In a separate policy shift, Trump announced plans for nearly 100% tariffs on imported chips and semiconductors, exempting U.S.-based manufacturers. Analysts say the trade tensions—while potentially disruptive—could still support domestic economic activity and, by extension, oil consumption.
Despite lingering concerns over the impact of protectionist measures, analysts believe a combination of falling inventories, potential Fed policy easing, and geopolitical supply risks are likely to keep oil prices buoyant in the near term.
