Oil Prices Rise on Demand Expectations and Upbeat Economic Data
As of July 17, 2025, oil prices edged higher in early trading, reversing three sessions of declines, as positive economic indicators from the U.S. and China bolstered demand optimism and eased concerns over global trade tensions. Brent crude futures rose modestly, while U.S. West Texas Intermediate (WTI) also gained, supported by a larger-than-expected draw in U.S. crude inventories, stronger Chinese refinery activity, and signs of de-escalating U.S.-China trade frictions under President Trump.
This uplift in sentiment comes amid broader market volatility, with oil benchmarks down about 10% over the past month due to prior concerns over tariffs and economic slowdowns.
However, gains were capped by builds in U.S. gasoline and diesel stocks, signaling potential weakness in summer travel demand.
Global oil markets remain well-supplied, with the International Energy Agency (IEA) forecasting world oil demand growth at 700 kb/d for 2025—the lowest since 2009 outside of the Covid year—amid no major disruptions.
The U.S. Energy Information Administration (EIA) projects Brent to average $69 per barrel (bbl) this year, up $3/bbl from prior estimates, driven by near-term price strength.
Current Price Levels and Movements
Prices as of early Asian trading on July 17 (around 0000-0100 GMT) showed modest gains, building on the previous day’s marginal losses of over 0.2%.
Alternative early quotes: Brent at $68.60 (+8 cents, +0.1%), WTI at $66.54 (+16 cents, +0.2%).
Prices have fluctuated slightly based on timing, with Brent up 0.08% daily and down 19.43% year-to-date, while WTI rose 0.26% daily but down 18.14% YTD.
Key Drivers: Demand Expectations and Economic Data
The rally was primarily fueled by indicators pointing to resilient demand in the world’s top two oil consumers, alongside supply tightness signals.
- U.S. Economic Data and Inventories: The Federal Reserve’s Beige Book reported U.S. economic activity picking up in recent weeks, though the outlook remains “neutral to slightly pessimistic” due to tariff pressures on prices.
A key bullish factor was the EIA’s report showing U.S. crude stockpiles falling by 3.9 million barrels to 422.2 million barrels last week—far exceeding the forecasted draw of 552,000 barrels—indicating stronger refinery runs and demand.- However, gasoline and diesel inventories built unexpectedly, tempering enthusiasm over summer driving season demand.
- China’s Refinery Activity and Growth: China’s crude oil processing surged to 62.24 million metric tons in June (about 15.15 million bpd), up 8.5% year-over-year and the highest since September 2023, driven by favorable margins and cheap oil imports.
This reflects robust fuel demand despite Q2 economic growth slowing less than expected, partly from front-loading exports to evade U.S. tariffs.
China also built crude stockpiles by 1.42 million bpd in June, the fourth straight month above 1 million bpd, signaling strategic buying amid price swings.
- Easing Trade Tensions: President Trump’s actions, including lifting the ban on AI chip sales to China, announcing trade deals with Indonesia and Vietnam, and hinting at agreements with India and Europe, reduced fears of broader tariffs impacting global growth and oil demand.
Trump also softened rhetoric on China, proposing lower tariffs on smaller countries and expressing optimism on deals related to illicit drugs.
Analyst Views and Market Sentiment
Experts highlighted the interplay of these factors, with sentiment turning cautiously optimistic despite lingering risks from tariffs and EV adoption in China denting long-term oil demand.
- Tina Teng, independent analyst: “China’s better-than-expected economic data and the U.S.’s larger-than-expected oil inventory draw have both been bullish factors for oil prices.”
- John Paisie, President of Stratas Advisors: “Support has come from the positive news pertaining to some easing of trade tensions between China and the U.S. with President Trump lifting the ban on the sale of AI chips to China along with the announcement of a trade deal with Indonesia.” He also noted a “favorable margin environment associated with the refining sector” with wide product spreads.
Broader viewpoints include concerns that ongoing tariffs could slow global growth, putting downward pressure on prices, though current data substantiates claims of resilient demand—potentially politically incorrect in downplaying tariff impacts, but backed by inventory draws and throughput surges.
On X, limited recent posts echoed this, with one noting positive U.S. and China signals lifting sentiment.
Outlook and Risks
While no specific forecasts were updated today, the IEA sees 2025 supply outpacing demand without disruptions, potentially capping upside.
Risks include U.S. product inventory builds and China’s EV boom stunting oil demand growth, despite strong economic ties.
Investors will watch upcoming data like U.S. retail sales or June (due today) for further demand cues, though prior May figures were weak.
Overall, today’s lift suggests short-term bullishness, but structural factors like electrification could pressure long-term prices.
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