Morning Highlights: Oil steady as Chinese refinery activity offsets tariff worries

Wednesday, July 16, 2025

Oil prices traded in a narrow range on Wednesday, as strong signs of Chinese crude consumption helped offset renewed concerns that U.S. tariffs could drag down global growth and fuel demand.

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Market snapshot (as of 6:10 EST):

• Brent (September): $68.42 (▼$0.29)

• WTI (August): $66.18 (▼$0.34)

Both benchmarks have been seesawing near three-week highs, underpinned by resilient summer demand but capped by macroeconomic headwinds.

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Tariff tensions keep investors cautious

U.S. President Donald Trump has threatened a 30% tariff on European Union imports from August 1, a move European officials say would end normal trade between two of the world’s largest economies. The European Commission is preparing to target €72 billion ($84 billion) of U.S. goods for potential retaliation if talks collapse.

“The latest U.S. salvo towards Russia failed to reignite fears of sustained supply disruption, and as a result, oil continued to drift lower yesterday,” said PVM analyst Tamas Varga.

Trump also warned on Monday that the U.S. will impose “very severe tariffs” on Russia in 50 days if there is no peace deal over Ukraine. However, traders have largely shrugged off immediate supply concerns given the lengthy deadline.

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China refineries ramp up after maintenance

Losses were limited by evidence that China’s demand remains firm despite soft consumer inflation:

• June crude runs surged to 15.15 million barrels per day, the highest since September 2023.

• State-owned refiners including Sinopec and PetroChina operated above 80% capacity, up from 73% in May.

• Traders reported a 1.3 million bpd build in surplus inventories, the largest monthly increase since 2020.

“Despite the weak CPI reading, refiners are clearly gearing up to meet stronger Q3 fuel demand,” said one Beijing-based trader.

Bloomberg noted that low inflation gives policymakers flexibility to maintain supportive monetary policy without hiking rates, a positive for industrial and transport fuel consumption.

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OPEC sees brighter second half

OPEC’s latest monthly report on Tuesday projected that the global economy will improve in H2 2025, led by better-than-expected growth in Brazil, China and India, and a rebound in the U.S. and EU.

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U.S. inventory builds reinforce mixed sentiment

American Petroleum Institute data late Tuesday showed:

• Crude inventories rose by 839,000 barrels last week.

• Gasoline stocks increased 1.93 million barrels.

• Distillate inventories gained 828,000 barrels.

The builds come as U.S. driving season demand faces headwinds from tariffs and broader economic uncertainty.

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Key factors to watch

• Official U.S. stockpile data from the Energy Information Administration due Wednesday afternoon.

• Progress on U.S.-EU tariff negotiations before the August 1 deadline.

• Any further comments from Trump on Russia sanctions.

• Chinese refinery throughput trends heading into peak summer.

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Bottom line

Even as tariffs loom over global growth, China’s high refinery runs and tight prompt supplies are providing a floor under prices. Still, most remain cautious, awaiting clarity on trade policy and macro trends before committing to fresh positions.