Oil prices rise on falling US stockpiles

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 70c to $60.21 a barrel by 8.58am GMT. West Texas Intermediate (WTI) crude futures gained 83c to $55.76 a barrel.

The two benchmarks are headed for monthly losses of about 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 is due at 2.30pm 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 is 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 phone call between the US and China on trade, and that it hoped Washington could create conditions for talks.

Crude prices have fallen about 20% from 2019 highs hit in April, partly because of worries that the trade war is hurting the global economy and could dent oil demand.

On Wednesday, Morgan Stanley lowered its price outlook for the rest of the year for Brent to about $60 a barrel from $65 and for US crude to $55 a barrel from $58 as it downgraded its demand growth forecast for 2019 and 2020.

Reuters