WTI rises above $65.50 on US trade optimism

• WTI price drifts higher to near $65.75 in Thursday's early European session. 
• US trade talk progress boosts the market sentiment, underpining the WTI price. 
• Crude inventories in the United States fell by 3.169 million barrels last week, noted EIA. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $65.75 during the early European trading hours on Thursday. The WTI climbs on optimism surrounding a new US trade deal that would ease pressure on the global economy and a larger-than-expected decline in US crude inventories.

A new US trade deal and prospects of additional agreements could improve the global economic outlook and lift the WTI price. US President Donald Trump on Wednesday announced a "massive" deal with Japan that includes "reciprocal" tariffs of 15% on the country's exports to the US. This tariff rate is notably lower than the 25% previously threatened by Trump. Additionally, broader risk sentiment also improved amid reports of progress in US-EU trade talks.

About the data, US crude oil inventories fell last week, contributing to the WTI's upside. The US Energy Information Administration (EIA) weekly crude oil stock report showed crude oil stockpiles in the US for the week ending July 18 declined by 3.169 million barrels, compared to a fall of 3.859 million barrels in the previous week. The market consensus estimated that stocks would decrease by 1.4 million barrels. 

Oil traders will closely monitor a meeting between the EU and Chinese President Xi Jinping on Thursday, their first in-person summit since 2023. Furthermore, US Treasury Secretary Scott Bessent stated that he will meet with Chinese officials in Stockholm next week to discuss extending the trade truce. Any signs of renewed tensions could spark fresh concern over global fuel demand and weigh on the black gold.