Market sentiment was heavily influenced by recent developments in the ongoing trade dispute between the U.S. and China.

Oil prices rebounded on Wednesday after hitting five-month lows in the previous session, as investors reacted to escalating trade tensions between the United States and China and new supply outlooks from the International Energy Agency (IEA). Brent crude futures rose by 53 cents, or 0.85%, reaching $62.92 per barrel by early afternoon GMT, while U.S. West Texas Intermediate (WTI) crude gained 62 cents, or 1.06%, to $59.32 per barrel.

CBI News reports that market sentiment was heavily influenced by recent developments in the ongoing trade dispute between the U.S. and China, the world’s two largest oil consumers. Both nations recently imposed additional port fees on ships carrying goods between them, escalating the tit-for-tat trade measures. These actions risk causing significant disruptions to global shipping and oil transport routes, heightening concerns about supply chain stability.

In addition to tariffs, China announced increased controls on rare earth exports, a move that could affect several industries globally. In response, U.S. President Donald Trump threatened to double tariffs on Chinese imports to 100% and tighten software export restrictions starting November 1. This intensification of trade friction has added to uncertainty in energy markets.

UBS analyst Giovanni Staunovo noted that “oil prices are currently influenced by trade tensions and market risk sentiment,” emphasizing how geopolitical factors remain key drivers in the energy sector.

Beyond trade issues, the IEA released a forecast predicting a significant supply surplus in the global oil market in 2026. The agency warned that the surplus could reach up to 4 million barrels per day, largely due to increased production by OPEC+ countries and other producers, coupled with sluggish demand growth. This outlook contrasts with earlier, more optimistic supply-demand balances and suggests sustained pressure on prices in the medium term.

Analysts, including Yang An from Haitong Futures, highlighted that “the key for oil prices now is the degree of oversupply, reflected in changes in global inventories,” underlining the importance of stockpile data in assessing market conditions.

CBI News reports that market participants are closely awaiting weekly U.S. crude inventory figures to gauge current demand trends. A preliminary Reuters poll of analysts forecast a modest increase in crude oil stocks by about 200,000 barrels in the week ending October 10, while inventories of gasoline and distillates were expected to decline.

The American Petroleum Institute (API) scheduled its weekly inventory report for 4:30 p.m. EDT on Wednesday, followed by the Energy Information Administration’s (EIA) data release at 10:30 a.m. EDT on Thursday. Both reports were delayed by one day due to the Columbus Day and Indigenous Peoples' Day holiday on Monday.

These upcoming reports will provide crucial insights into U.S. fuel demand and supply dynamics, helping traders and analysts better understand near-term price movements amid the broader backdrop of geopolitical tensions and shifting supply forecasts.