Oil rises due to firm yuan, expectations of more OPEC cuts

Brent and WTI crude contracts fell to their lowest since January on Wednesday

LONDON: Oil jumped more than $1 a barrel on Thursday due to expectations that falling prices may lead to production cuts, coupled with a steadying of the yuan currency after a week of turmoil spurred by escalation in US-China trade tensions.

Brent crude was up $0.67 at $56.90 a barrel by 1130 GMT, after hitting a session high of $58.01.

US West Texas Intermediate (WTI) crude futures rose $0.96 to $52.05 a barrel after hitting a peak of $52.84.

China's yuan strengthened against the dollar and its exports unexpectedly returned to growth in July on improved global demand despite US trade pressure.

"Brent and WTI were rebounding on the combination of a stronger-than-expected official fix in the yuan, alleviating currency war fears," said Harry Tchilinguirian, Global Oil Strategist at BNP Paribas in London.

Reports that Saudi Arabia, the world's biggest oil exporter, had called other producers to discuss the slide in crude prices might also have supported the market, he said.

Both crude contracts fell to their lowest since January on Wednesday after the US Energy Information Administration said US crude stockpiles rose last week after nearly two months of decline as imports hit their highest since January.

Emily Ashford, Executive Director of Energy Research at Standard Chartered, said she would not read too much into a "short-term rise" on Thursday as it could be a correction to a sell-off that was "a little too extreme".

"We believe the oil market is starting to price in the fear of a severe and multi-year breakdown in US-China economic relations," she said.

Crude oil shipments into China, the world's largest importer, in July rose 14% from a year earlier as new refineries ramped up purchases. Fuel exports continued to climb as supply outstripped demand in the world's second-largest oil consumer.

Saudi Arabia plans to keep its crude oil exports below 7 million barrels per day (bpd) in August and September to drain global inventories and return the market to balance, a Saudi oil official said.

Geopolitical tensions over the safety of oil tankers passing through the Persian Gulf remained unresolved as Iran refused to release a British-flagged tanker it seized last month.

The US Maritime Administration said US-flagged commercial vessels should send their transit plans for the Strait of Hormuz and Gulf waters to US and British naval authorities, and that crews should not forcibly resist any Iranian boarding party.