Oil prices edged higher in Asian trading on Wednesday, buoyed by optimism following a new trade agreement between the United States and Japan, along with data showing a drop in U.S. crude inventories.
As of 22:07 ET (02:07 GMT), September Brent futures increased by 0.4% to $68.84 per barrel, while West Texas Intermediate (WTI) futures rose 0.3% to $65.50 per barrel.
This marks a rebound after oil prices fell for three straight sessions, pressured by ongoing U.S.-EU trade tensions and uncertainty surrounding President Donald Trump’s August 1 deadline for tariff hikes.
US-Japan Deal Supports Global Trade and Growth
President Trump announced Tuesday that the U.S. and Japan reached a broad trade agreement featuring a 15% tariff on Japanese imports, down from an earlier proposed 25%. The pact also includes a $550 billion Japanese investment in the U.S. economy.
The agreement opens Japanese markets to American exports including vehicles, agricultural products, and energy commodities, boosting confidence in global trade and future demand.
This deal is the most significant of several trade arrangements the White House has secured ahead of the August 1 deadline, when tariffs on key partners were set to increase.
Oil traders welcomed the development as a signal of stronger economic activity ahead, which typically drives higher crude consumption.
API Reports Unexpected Drop in U.S. Crude Stocks
Adding to the positive momentum, the American Petroleum Institute (API) reported a surprising 577,000-barrel decline in U.S. crude inventories for the week ending July 18, reversing a prior build of 19.1 million barrels.
This reduction points to a potential rebound in fuel demand amid the busy summer travel season.
Gasoline inventories decreased by 1.2 million barrels, while distillate stocks—which include diesel and heating oil—rose by approximately 3.48 million barrels.
ING analysts noted, “This will offer some relief to the middle distillate market, which has been looking increasingly tight.”
Markets now await the official U.S. Energy Information Administration (EIA) inventory data due later Wednesday for further clarity.
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