Crude oil edges higher on upbeat gasoline demand

Today’s headlines

What’s happening: Crude oil prices settled slightly higher on Wednesday following the release of the US Energy Information Administration (EIA) report.

What happened: Higher-than-estimated gasoline demand from the US and attacks in the Red Sea lent support to oil prices on Wednesday.

Tariff concerns and OPEC’s decision to increase output limited the overall gains for crude oil.

Why it matters: The EIA reported on Wednesday that US crude stockpiles rose by 7.1 million barrels to 426 million barrels last week, compared to market estimates of a decline of 2.1 million barrels. However, gasoline stockpiles declined by 2.658 million barrels and inventories of distillate fuels fell by 825,000 barrels last week. Gasoline demand in the US rose 6% to 9.2 million barrels per day last week.

The report also predicted that the US would produce less oil this year than was earlier anticipated, with producers slowing down production activity due to lower oil prices.

After months of calm, a European Union naval force said Yemen’s Houthi rebels attacked a Liberian-flagged cargo ship in the Red Sea, which killed three mariners and wounded two others. Concerns around supply disruption lent support to oil prices.

Markets also remained cautious as US President Donald Trump announced 50% tariffs on copper, which fuelled speculations of broader trade disruptions. Lower trade directly impacts oil consumption. Trump also announced a 50% tariff on imports from Brazil, effective August 1, up sharply from the 10% tariff imposed in April.

OPEC+ is expected to increase crude output again in September, after an approved increase of 548,000 bpd for August on Saturday. Saudi Aramco said it expects global oil demand to rise by 1.2 to 1.3 million bpd during the second half of this year.

Weakness in the US dollar also lent some support to oil prices, as a higher greenback makes commodities more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell to 97.56 on Wednesday.

Brent crude futures gained 4 cents, or around 0.1%, to close at $70.19 per barrel on Wednesday, while US WTI crude oil rose 5 cents, or about 0.1%, to settle at $68.38 per barrel.

What to watch: Investors will continue monitoring tariff-related news, which are expected to significantly impact oil prices ahead.

Data on EIA natural gas stockpiles (1830 UAE Time) will also remain in focus today. US natural gas inventories, which rose 55 billion cubic feet in the week ending June 27, are expected to rise by 56 billion cubic feet in the latest week.

The markets today

US stocks in focus today ahead of jobless claims data

Context: US equity markets settled higher on Wednesday with Nvidia surging to a valuation of $4 trillion.

Details: Investors continued monitoring tariff-related news from the US President, with Trump saying he was close to an agreement with the European Union. Meanwhile, Trump issued tariff notices to its smaller trading partners.

Nvidia’s share price briefly rose to $4 trillion on Wednesday, making it the first company to hit this mark. The stock, which has biggest weightage on the S&P 500, has added around 22% this year due to rising demand for its high-performance chips from companies investing in AI.

Data released on Wednesday showed US wholesale inventories declined by 0.3% to $905.5 billion in May, following a 0.1% gain in April, with firms adjusting to Trump’s tariffs. Wholesale inventories recorded the first decline since December 2024, with the stockpiles of durable goods falling by 0.8%, versus a 0.1% gain in the previous month.

The Dow Jones index added 217.54 points, or 0.49%, to settle at 44,458.30 on Wednesday. The S&P 500 climbed 0.61% to 6,263.26, while the Nasdaq 100 rose 0.72% to close at 22,864.91.

What to watch: Investors await the release of economic data on initial jobless claims (1630 UAE Time) and continuing jobless claims (1630 UAE Time) from the US today. Initial jobless claims in the US, which fell by 4,000 from the previous week to 233,000 in the week ending June 28, are expected to rise to 235,000 in the latest week. Continuing jobless claims, which came in unchanged at 1.96 million in the week ending June 21, are projected to increase to 1.98 million in the latest week.

Other Markets: European indices closed higher on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.15%, 1.42%, 1.44% and 0.78%, respectively.

The news shaping the markets

The US is supplying artillery shells and mobile rocket artillery missiles to help Ukraine in its ongoing war with Russia. Despite this, the RUB/USD rose in forex trading this morning.

The Bank of Korea held its base rate at 2.50% during its July meeting, lending support to the KRW/USD forex pair.

Japan’s producer prices rose 2.9% year-over-year in June, following a 3.2% rise in the previous month. The latest reading coming in-line with market estimates sent the JPY/USD pair higher in forex trading this morning.

Sri Lanka’s number of foreign tourists arrivals surged by 21.8% year-over-year to 138,241 in June, following 18.5% growth in the previous month, which lent some support to the LKR/USD forex pair.

UK’s house price balance came in unchanged from the previous month at -7% in June. This being better than market estimates of -8% sent the GBP/USD pair higher in forex trading this morning.

What else to watch today

Italy’s industrial production (1200 UAE Time) and 12-month BOT auction (1310 UAE Time), South Africa’s manufacturing production (1500 UAE Time), India’s M3 money supply (1530 UAE Time), Turkey’s foreign exchange reserves (1530 UAE Time), Brazil’s inflation rate (1600 UAE Time), US 14-week Bill auction (1930 UAE Time), 8-week Bill auction (1930 UAE Time), 5-year mortgage rate (2000 UAE Time), 30-year mortgage rate (2000 UAE Time) and 30-year Bond auction (2100 UAE Time), Mexico’s monetary policy meeting minutes (1900 UAE Time), as well as Canada’s 5-year Bond auction (2000 UAE Time).