Oil steadies on US-China trade hopes and US stockpile increase

London — Oil steadied on Thursday amid optimism that the US and China can resolve their trade dispute, though prices came under pressure from Saudi Arabia’s moves to restore output quickly after attacks on its oil installations.

Brent crude futures were down 12c, or 0.2%, at $62.27 a barrel by 10.57am GMT. US West Texas Intermediate (WTI) crude futures were little changed, losing 3c to $56.46 a barrel.

On Wednesday, US President Donald Trump signaled that a resolution to the dispute with China might be near, which could eventually boost fuel demand. A day after delivering a stinging rebuke to China over its trade policies, Trump said Beijing wants to make a deal and it “could happen sooner than you think”.

Trump and Japanese Prime Minister Abe Shinzo also signed a limited trade deal that would open Japanese markets to $7bn of US products annually.

“With the swift resolution of production outages and the resilience of Saudi’s oil sector, barring a repeat of drone attacks, the oil market’s focus will, in our opinion, return to the economy and trade wars,” global oil strategist Harry Tchilinguirian told the Reuters Global Oil Forum. “News on the US-China front was positive yesterday, albeit without materially affecting oil prices.”

Brent and WTI fell on Wednesday to their lowest since the September 14 attacks on Saudi Arabia.

Prices were weighed down by a surprise 2.4-million barrel build in US crude inventories last week and a faster-than-expected recovery of Saudi output after the drone and missile strikes on two of its oil-processing plants.

The world’s top oil exporter has restored its production capacity to 11.3-million barrels per day (bpd), sources briefed on Saudi Aramco’s operations told Reuters.

“The oil market has seemingly returned to business as usual,” said Norbert Rücker, head of economics and next-generation research at Julius Bär. “Instead of the attack-related fallout including disruption and geopolitical risks, the soft economy and stagnant oil demand are back in focus.”

Crude futures were pressured by sluggish economic data in leading European economies and Japan.

A firmer dollar, which registered its sharpest daily gain in three months overnight and held steady in Asian trade, also weighed on oil as it makes dollar-traded fuel imports more costly for countries using other currencies.

Reuters

Source: businesslive.co.za