Oil News: Bullish Sentiment Builds on U.S. Output Cuts and China Trade Hopes

Oil Prices Forecast Higher on Support From Trade Optimism and Supply Signals

Crude oil futures edged higher early Wednesday as traders weighed support from U.S.-China trade optimism, lower U.S. output, and technical positioning against ongoing oversupply fears. WTI futures rose about 1% in early trading, building on Tuesday’s 3% rebound from four-year lows. Key resistance levels at $59.68 and $60.09 are now in focus, with a break above potentially triggering a push toward $63.06.

The immediate support zone lies at $57.78, with a more critical floor near $55.30—levels that appear to be forming a broader base. With recent lows clustering near $54.48 and $55.30, technical charts suggest a value zone is emerging, reinforcing the notion that the downside may be limited unless fresh bearish catalysts surface.

At 10:33 GMT, Light Crude Oil Futures are trading $59.48, up $0.39 or +0.66%.

Trade Talks in Focus as Market Weighs Tariffs and Central Bank Policy

Markets are watching closely as U.S. and Chinese officials prepare for high-level trade talks in Switzerland this weekend. This marks a pivotal attempt to ease a trade war that has dampened global demand forecasts. Analysts from SEB and PVM noted that investor sentiment has improved on expectations that the talks could pave the way for reduced tariffs. At the same time, the Federal Reserve is expected to hold rates steady, with no major policy changes anticipated as inflation risks are balanced against slowing growth.

OPEC+ Output Hikes Priced In, but U.S. Shale Cuts Offer Counterweight

Oil’s recent selloff was largely driven by OPEC+’s decision to accelerate production increases for a second consecutive month. However, analysts now believe this move was fully priced in. Adding support to the bullish case, some U.S. producers—like Diamondback Energy and Coterra Energy—are reportedly cutting rigs, signaling potential future declines in shale output. This supply restraint, combined with signs of demand strength from Europe and China, has helped stabilize sentiment.

Crude Inventory Data Expected to Confirm Drawdown

The market is also awaiting official weekly inventory data from the EIA, with expectations for an 800,000-barrel draw in U.S. crude stocks. This would mark the second consecutive weekly decline—a potential sign that the supply-demand balance is beginning to tighten. Preliminary figures from the American Petroleum Institute showed a larger-than-expected 4.5 million barrel drop for the week ended May 2.

Market Outlook: Bullish Bias Strengthens as Value Zone Firms

With positive signals from trade diplomacy, a dovish Fed, signs of U.S. output discipline, and firming technical support, the oil market appears poised for a bullish turn. While volatility is likely to persist, the path of least resistance in the near term is to the upside, with WTI eyeing a breakout above $60.09 if fundamentals continue to support.

More Information in our Economic Calendar.