Oil prices rise on drop in US crude inventories

Published: August 28, 2019
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Brent and WTI, however, heading for monthly losses of around 8% and 5% respectively. PHOTO: Reuters

Brent and WTI, however, heading for monthly losses of around 8% and 5% respectively. PHOTO: Reuters

LONDON: Oil prices rose on Wednesday after industry data showing a fall in stockpiles of US crude somewhat eased worries about subdued demand due to the China-US trade war.

Brent crude futures climbed $0.7 to $60.21 a barrel by 0858 GMT. West Texas Intermediate (WTI) crude futures gained $0.83 to $55.76 a barrel.

The two benchmarks are headed for monthly losses of around 8% and 5% respectively, weighed down by trade barriers between the world’s two biggest oil consumers.

US crude stockpiles plummeted by 11.1 million barrels last week as imports dropped, compared with expectations for a 2-million-barrel draw, data from the American Petroleum Institute (API), an industry group, showed.

“Overnight, the energy complex was given a shot of bullish adrenaline by a supportive API report,” PVM analysts said in a note.

The US government’s weekly inventory report was due at 1430 GMT. If the official numbers confirm the API data, it would be the biggest weekly decline in nine weeks.

US President Donald Trump said on Monday that he believed China was sincere about wanting to reach a trade deal, while Chinese Vice Premier Liu He said China was willing to resolve the dispute through “calm” negotiations.

On Tuesday, however, concerns resurfaced after China’s foreign ministry said it had not heard of any recent telephone call between the United States and China on trade, and that it hoped Washington could create conditions for talks.

Crude prices have fallen about a fifth from the 2019 highs hit in April, partly because of worries that the trade war is hurting the global economy and could dent oil demand.

Morgan Stanley on Wednesday lowered its price outlook for the rest of the year for Brent to around $60 per barrel from $65 and for US crude to $55 per barrel from $58 as it downgraded its demand growth forecast for this year and next.

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