Investing.com - Oil prices fell slightly in early U.S. trade on Thursday, cooling after a rebound from recent lows, as sentiment remained strained amid concerns over a U.S. recession and high production.

Crude prices bounced back from over three-year lows this week, buoyed in part by a soft reading on U.S. inflation, along with a weaker dollar. Data showing a substantially bigger-than-expected draw in U.S. gasoline inventories also helped soothe some concerns over slowing demand.

But oil was still nursing steep losses so far in 2025, as traders fretted over softening demand in major economies amid a brewing U.S.-led trade war.

U.S. President Donald Trump threatened on Wednesday to place 200% tariffs on alcohol imports from the European Union in response to the bloc rolling out retaliatory countermeasures against his steel and aluminum levies, marking the latest escalation in international trade tensions.

Brent oil futures expiring in May fell 0.8% to $70.40 a barrel, while West Texas Intermediate crude futures declined 0.9% to $67.07 a barrel by 09:33 ET (13:33 GMT).

OPEC+ flags higher production despite oversupply concerns

The Organization of the Petroleum Exporting Countries and its allies, an oil group known as OPEC+, said in a monthly report on Wednesday that its oil production rose by 363,000 barrels per day to 41.01 million bpd in February, as the cartel begins phasing out nearly two years of production cuts.

February’s rise was led by Kazakhstan, and comes as the group prepares to increase production even further in April.

But OPEC’s plans for higher production have fueled increased concerns that oil markets will be flush with supply, even as a cooling global economy could potentially bring down demand.

But the cartel maintained its outlook for demand growth of 1.45 million bpd in 2025, stating that it expects the global economy to take increased trade tariffs in its stride.

Oil markets digest softer inflation, recession concerns

Oil took some relief from a mildly softer-than-expected U.S. inflation readings for February, which weighed on the dollar.

But the data did little to ease concerns over a potential recession in the world’s largest economy, especially amid heightened uncertainty over President Trump’s trade policies.

Trump’s hawkish stance on China -- the world’s biggest oil importer -- has particularly fueled concerns over a potential increase in economic headwinds that could hurt its appetite for crude.

(Ambar Warrick contributed reporting.)