Crude oil prices climbed on Wednesday as U.S. crude oil stockpiles declined than expected in the week ended February 21.
The decline is projected to help counterbalance concerns over rising global supply and a weakening demand outlook.
Brent crude oil edged up 27 cents to $73.29 per barrel while West Texas Intermediate (WTI) crude gained 25 cents to trade at $69.18 per barrel in early trading hours.
The gains come amid ongoing volatility in the oil market due to the shift in supply dynamics and economic uncertainty.
The latest data from the American Petroleum Institute (API) revealed that U.S. crude inventories fell by 640,000 barrels during the week under review, against analysts’ expectations of a 2.6 million barrel increase.
The drawdown provided a temporary lift to oil prices as lower inventories typically indicate stronger demand or tighter supply.
Investors are closely watching the U.S. Energy Information Administration’s (EIA) official inventory report, which is expected to confirm or challenge the API data later this week.
While the stockpile decline provided support, broader economic concerns continue to exert downward pressure on crude prices. A report released Tuesday showed that U.S. consumer confidence fell sharply.
Meanwhile, Germany’s economy contracted in Q4 2024, further raising concerns about slowing global energy consumption.
Adding to the market’s uncertainty, investors are assessing the impact of new U.S. sanctions targeting Iran’s crude exports. The move aims to restrict Iran’s ability to sell oil on international markets, potentially tightening supply.
However, traders remain cautious, as similar measures in the past have often been circumvented through alternative export channels.
The oil market is also navigating geopolitical risks, including the potential for new U.S. tariffs on energy imports from Canada and Mexico.
If imposed, such tariffs could disrupt North American crude flows and further complicate the supply-demand balance.
At the same time, refiners are benefiting from strong refining margins, which have kept demand for crude stable despite broader economic concerns.
Analysts suggest that this trend, along with supply-side factors, could provide a floor for oil prices in the near term.
Oil market analysts predict that Brent crude could trade around $73.60 per barrel by the end of this quarter with projections reaching $78.52 per barrel over the next 12 months.
However, much depends on macroeconomic trends, geopolitical developments, and OPEC+ policy decisions.
For now, crude prices remain supported by falling U.S. stockpiles, but lingering demand concerns and supply chain uncertainties could limit further gains.
Investors will be watching closely for the EIA inventory report and any potential policy shifts from major oil producers in the coming weeks.
