Oil steadies above $64 as trade hopes offset US inventories

Prices rose in last two days on expectations of preliminary US-China trade deal

LONDON: Oil steadied above $64 a barrel on Wednesday as an industry report showing a surprise boost in US crude inventories was offset by optimism about a US-China trade deal being agreed soon.

Oil industry group the American Petroleum Institute on Tuesday said US crude inventories rose by 3.6 million barrels, compared with analysts' expectations for a decrease. The US government's supply report is due later on Wednesday.

Brent crude was up $0.2 at $64.47 a barrel by 1118 GMT, while US West Texas Intermediate crude was $0.07 higher at $58.48.

Oil had risen for the last two days on expectations that China and the United States, the world's two biggest crude oil users, would soon sign a preliminary agreement beginning an end to their 16-month trade dispute.

"Trade deal optimism persists," said Tamas Varga of oil broker PVM. "The belief in a positive trade deal continues unabated."

That was fueled by comments from President Donald Trump, who said on Tuesday the United States and China are close to an agreement after top negotiators spoke by telephone and agreed to keep working on remaining issues.

Attention will focus later on Wednesday on the US government's weekly oil supply report from the Energy Information Administration, due at 1530 GMT.

"If the numbers are similar to the API, this would be the fifth straight week of stockbuilds, and would not be the most constructive reading for WTI as we head into the Thanksgiving holiday," ING analyst Warren Patterson said in a note.

Expectations that the Organisation of the Petroleum Exporting Countries (OPEC) and allies such as Russia will maintain their deal to restrain supply are also supporting prices.

The producers, known as OPEC+, hold their next oil policy review meetings on December 5-6 in Vienna. They are expected to extend their supply cut agreement further into 2020.