After three straight days of declines, oil prices finally found some relief. By Wednesday morning, global crude prices saw a modest rebound, lifted by two key developments: a new trade pact between the U.S. and Japan that eased certain tariff uncertainties, and fresh inventory data showing strong energy demand in the U.S.

As of early Wednesday, Brent crude futures rose 0.48% to $68.92 a barrel, while West Texas Intermediate (WTI) futures gained 0.51%, reaching $65.64 a barrel. The uptick offered a glimmer of confidence after recent losses fueled by global trade tensions and concerns over supply stability.

The big catalyst came from the trade front. On Tuesday, U.S. President Donald Trump announced a new agreement with Japan covering 15% of imported goods. Under the deal, Japan pledged up to $550 billion in investments and committed to opening its market—including sectors like automobiles and rice—to U.S. companies. Both sides also agreed to reciprocal 15% tariffs, effectively scrapping the threat of a 25% punitive tariff that was set to take effect in August. This move not only diffuses an immediate risk but also lays groundwork for deeper bilateral economic cooperation.

Previously, markets had been rattled by fears that the European Union would respond with retaliatory trade measures against the U.S., putting pressure on oil. The U.S.-Japan deal has provided some much-needed stability to global supply chains and investment outlooks—especially in the automotive and tech industries. Japanese automakers such as Toyota and Honda have already announced plans to increase the proportion of U.S.-sold vehicles built locally to 80% by 2027, a move that could save them roughly $1.8 billion in tariffs each year, while also strengthening their U.S. supply chains.

On the demand side, encouraging signals are coming from U.S. energy consumption. According to a Reuters survey, U.S. crude inventories fell by about 1.6 million barrels in the week ending July 18. Data from the American Petroleum Institute (API) also showed simultaneous declines in both crude and gasoline stocks, with only distillates posting an increase. This suggests that domestic demand remains solid—particularly during the summer travel peak.

Washington may also be shifting its stance on energy policy. On Tuesday, the U.S. Energy Secretary indicated that additional sanctions on Russian oil are being considered, as part of efforts to increase pressure related to the ongoing conflict in Ukraine. While the European Union approved its 18th sanctions package last week—including a new price cap on Russian crude—many analysts believe these measures will have limited impact if the U.S. doesn’t follow suit.

In summary, the breakthrough in U.S.-Japan trade talks has helped stabilize market sentiment and offered some support to oil prices. Meanwhile, the drawdown in America’s crude stockpiles points to continued resilience in economic activity. In the short term, investors will be watching closely for follow-through on the trade deal and any shifts in U.S. energy policy that might influence the supply outlook. With geopolitical uncertainties still in play, volatility in oil prices remains a real possibility.