Oil Updates - crude climbs from multi-year low, tariff concerns and rising supply weigh

07/03/2025 03:40 AST

Oil prices rose on Thursday after heavy sell-offs drove the market to a multi-year low, however tariff uncertainties and a rising supply outlook capped gains.

Brent futures were trading up 39 cents, or 0.56 percent, at $69.69 a barrel by 7:16 a.m. Saudi time, while US West Texas Intermediate crude futures climbed 39 cents, or 0.59 percent, to $66.70 a barrel.

Brent plunged 6.5 percent in the previous four sessions, dropping to its lowest since December 2021 on Wednesday, while WTI fell 5.8 percent over the same period to its lowest since May 2023.

"The sharp dip in oil prices below the key $70.00 level may prompt a slight breather in today's session, as technical conditions attempt to stabilize from oversold territory," said Yeap Jun Rong, market strategist at trading platform IG.

"However, recovery momentum remains fragile, with unfavorable supply-demand dynamics being a key overhang for bullish sentiment," he added.

Prices fell after the US enacted tariffs on Canadian and Mexican goods, including energy imports, at the same time major producers decided to raise output quotas for the first time since 2022.

The decline eased as the US said it will exempt automakers from the 25 percent tariffs, raising optimism the impact of the trade dispute may be mitigated.

Additionally, a source familiar with the discussions said that US President Donald Trump may eliminate the 10 percent tariff on Canadian energy imports, such as crude oil and gasoline, that comply with existing trade agreements.

"Trump's trade measures are threatening to reduce global energy demand and disrupt trade flows in the global oil market. This was exacerbated by a rise in US inventory," Daniel Hynes, senior commodity strategist at ANZ, said in a note on Thursday.

Market sentiment remains bearish from the double impact of the tariffs and the decision by OPEC+, the Organization of the Petroleum Exporting Countries and allies including Russia to raise output.

Crude stockpiles in the US, the world's biggest oil consumer, rose more than expected last week amid seasonal refinery maintenance, while gasoline and distillate inventories fell due to a hike in exports, the Energy Information Administration said on Wednesday.

Crude inventories rose by 3.6 million barrels to 433.8 million barrels in the week, the EIA said, far exceeding analysts' expectations in a Reuters poll for a 341,000-barrel rise.

There are further signs of weakness in American oil demand, with US waterborne crude oil imports dropping to a four-year low in February, driven by a fall in Canadian barrels shipped to the East Coast, according to ship tracking data, as refinery maintenance, including a long turnaround at the largest plant in the region, quashed demand.

Tariffs also remain in effect on US imports of Mexican crude, a smaller supply stream than Canadian crude but an important one for US refineries on the Gulf Coast.

Reuters