Global oil prices rose 2 per cent on Wednesday as U.S. government data revealed tighter-than-expected oil and fuel inventories.
However, concerns over a potential United States economic slowdown and the impact of tariffs on global growth kept investors cautious.
Brent futures climbed $1.33 (1.9 per cent) to $70.89 per barrel, while U.S. West Texas Intermediate crude rose $1.45 (2.2 per cent) to $67.70 per barrel.
U.S. crude stockpiles increased by 1.4 million barrels last week, below the expected two-million-barrel rise, according to government data.
“This week, the oil build was smaller than expected and gasoline and diesel draws were larger than expected,” said Josh Young, chief investment officer, Bison Interests. “This evidences stronger demand and could see oil prices rise as a result.”
Crude futures have recently gained support from a weaker U.S. dollar and the Energy Information Administration softening its earlier outlook on an oversupplied oil market, said UBS analyst, Giovanni Staunovo.
On Wednesday, the dollar remained near a five-month low against major currencies as traders assessed U.S.-EU tariff tensions and a possible Russia-Ukraine ceasefire.
Signs of cooling inflation provided some relief to investors, as U.S. consumer prices rose less than expected in February.
However, the impact may be short-lived, with aggressive tariffs on imports likely to drive up costs in the coming months.
Thiis improvement, however may be short-lived, as aggressive import tariffs are expected to drive up the cost of most goods in the coming months.
Markets fear that tariffs could increase business costs, fuel inflation, and weaken consumer confidence, potentially hurting economic growth.
“Fears of a US recession, weakness in US stock markets and concerns over tariffs affecting key oil players such as China, introduced additional market uncertainty and these factors could continue to fuel a bearish sentiment, putting a lid on oil prices,” said Hassan Fawaz chairman and founder of brokerage GivTrade.
