Oil prices climbed on Thursday as optimism returned to the markets, driven by a drop in US crude inventories, renewed trade dialogue between the US and China, and the Federal Reserve’s decision to hold interest rates steady.
Brent crude, the international benchmark, rose approximately 0.5% to $61.21 per barrel at 10:27 a.m. GMT, up from its previous close of $60.88. US benchmark West Texas Intermediate (WTI) also gained about 0.6%, reaching $58.05 per barrel from $57.70.
The price gains came after the US Energy Information Administration (EIA) reported a 2 million barrel decrease in crude oil inventories, bringing total stockpiles to 438.4 million barrels for the week ending May 2. Though slightly below analyst expectations of a 2.5 million barrel drop, the data suggests strong domestic demand in the world’s largest oil consumer.
Investor sentiment was further buoyed by progress in trade negotiations between Washington and Beijing. US Treasury Secretary Scott Bassent and Trade Representative Jamison Greer are scheduled to meet Chinese officials this week in Switzerland. This will mark the first formal talks since President Donald Trump imposed sweeping tariffs on Chinese imports.
China confirmed that the talks were initiated by the US and reiterated its willingness to engage in constructive dialogue.
Adding to the market’s momentum, President Trump announced on Wednesday that the US would sign a trade agreement on Thursday with a “respected major country.” Though unconfirmed, US media speculated that the partner could be the United Kingdom.
The easing of trade tensions has helped calm fears of a broader global trade war, improving the outlook for international oil demand.
At the same time, the Federal Reserve’s Open Market Committee kept its benchmark interest rate unchanged at 4.25%–4.50%, where it has remained since December last year. Analysts noted that lower rates, combined with a weaker dollar and rising economic activity, could further support oil prices in the coming months.
However, Federal Reserve Chair Jerome Powell cautioned that continued tariff hikes could increase inflation, slow economic growth, and raise unemployment. He emphasized that any rate cuts this year would depend on how these dynamics evolve, especially in terms of the labor market and inflation trends.
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