Summary
• Macroeconomic concerns stemming from tariffs remain prevalent
• Global demand firmer year on year and exceeded expectations, JP Morgan analysts say
• Gasoline inventories fall more than expected, EIA data shows
(Reuters) – Oil prices were largely steady on Thursday after surging in the previous session on a larger-than-expected draw in U.S. gasoline stocks, as markets weighed macroeconomic concerns against firm near-term demand expectations.
Brent futures were up 17 cents to $71.12 a barrel at 0843 GMT, while U.S. West Texas Intermediate crude futures were up 13 cents to $67.81 a barrel.
Both benchmarks rallied about 2% on Wednesday after U.S. government data showed tighter-than-expected oil and fuel inventories.
U.S. gasoline inventories fell by 5.7 million barrels, more than the 1.9 million-barrel draw expected by analysts, while distillate stocks also dropped more than anticipated, despite gains in crude stocks.
“Declining U.S. gasoline inventories raised expectations for a seasonal demand increase in spring, but concerns about the global economic impact of tariff wars weighed on the market,” said Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment.
“With strong and weak factors progressing simultaneously, it has become difficult for the market to lean decisively in one direction or the other,” he added.
U.S. President Donald Trump threatened on Wednesday to escalate a global trade war with further tariffs on European Union goods, as major U.S. trading partners said they would retaliate for trade barriers already erected by the U.S. president.
Trump’s focus on tariffs has rattled investors, consumers and business confidence, and raised U.S. recession fears.
With the U.S. president’s stated commitment to cheaper oil, Citi analysts said their outlook for Brent by the second half of 2025 is $60 a barrel.
Meanwhile, the Organization of the Petroleum Exporting Countries said on Wednesday that Kazakhstan led a sizeable jump in February crude output by the wider OPEC+, highlighting a challenge for the producer group in enforcing adherence to agreed output targets.
Worries about flagging jet fuel demand weighed further on markets, with JP Morgan analysts saying that U.S. Transportation Security Administration data showed “passenger volumes for March have decreased by 5% year-over-year, following stagnant traffic in February”.
However, recent firm global demand numbers limited overall market weakness.
“As of March 11, global oil demand averaged 102.2 million barrels per day, expanding 1.7 million barrels per day year-over-year and exceeding our projected increase for the month by 60,000 barrels per day,” the JP Morgan analysts added.
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