Oil News: API Inventory Drop, Trade Talks Lift Oil Prices, but Trend Remains Bearish

Oil Prices Forecast Gains on Trade Talk Optimism and Inventory Draw

Light crude oil futures extended gains for a second consecutive session on Wednesday, climbing nearly 2% as traders took advantage of recent weakness. With downside pressure still intact, short-covering is pushing prices toward the pivot at $59.21—where selling interest is expected to re-emerge.

At 13:18 GMT, Light Crude Oil Futures are trading $58.51, up $1.27 or +2.22%.

Traders continue to eye short-term opportunities within a broader bearish setup. Any move above $59.21 would signal stronger buying interest, potentially targeting $60.96 next. However, counter-trend rallies remain vulnerable, especially with the 50-day moving average below the 200-day—a clear signal that the dominant trend remains lower.

U.S.-India Trade Talks Could Shift Global Crude Flows

Market sentiment improved after signs of progress emerged in long-stalled U.S.-India trade negotiations. Reports suggest the two countries are close to an agreement that would lower U.S. tariffs on Indian goods in exchange for India reducing imports of Russian crude.

MUFG analyst Soojin Kim noted that a shift away from Russian barrels could tighten supply in other crude grades, potentially supporting prices. President Trump confirmed that Indian Prime Minister Narendra Modi committed to cutting Russian oil purchases following their recent conversation.

China Talks Add Uncertainty but Offer Potential Upside

Traders are also tracking the upcoming U.S.-China trade meeting in Malaysia. While Trump expressed confidence in reaching an agreement with President Xi Jinping, he later cast doubt on the meeting’s timing. Even so, any movement toward easing tensions between the two major economies could improve demand expectations in the energy market.

Supply Concerns Add Fundamental Support

Supply-side concerns flared again after a planned summit between Trump and Russian President Vladimir Putin was postponed. Western pressure on Asian buyers to limit Russian crude imports is also contributing to renewed market tightness.

In the U.S., the American Petroleum Institute (API) reported declines in crude, gasoline, and distillate inventories last week. Further bullish pressure came from the Department of Energy, which announced plans to buy 1 million barrels for the Strategic Petroleum Reserve to take advantage of low price levels.

Bearish Market Structure Still Intact

Despite recent gains, the overall trend remains bearish. The 50-day moving average continues to trade below the 200-day, and traders remain in “sell the rally” mode unless key technical levels are reclaimed.

Resistance is expected at $59.21, with additional selling pressure likely near the 50-day and 200-day moving averages at $61.56 and $62.26. Unless buyers push through these levels, the rally remains vulnerable.

More Information in our Economic Calendar.