NEW YORK (Sept 6): Oil prices were little changed on Thursday as support from a sharp drawdown in U.S. crude inventories was countered by fears of slowing global demand growth amid doubts over resolving the U.S.-China trade feud.
Global benchmark Brent crude settled at $60.95 a barrel, rising 25 cents, while U.S. West Texas Intermediate (WTI) crude rose 4 cents to end at $56.30.
U.S. crude and product inventories fell last week, with crude drawing down for a third consecutive week despite a jump in imports, the Energy Information Administration said.
Crude stocks dropped 4.8 million barrels, nearly double analysts’ expectations, to 423 million barrels, their lowest since October 2018.
“It’s definitely a bullish report all around,” said Bob Yawger, director of energy futures at Mizuho in New York.
Oil soared more than 2% after the EIA report, but prices gradually pared those gains as scepticism crept back over the prospect of a nearing trade deal between the world’s two top economies despite another round of talks being scheduled for next month.
“I think the market across the board has built in as much hopefulness as they can about the U.S.-China trade war,” said John Kilduff, a partner at Again Capital in New York.
China and the United States on Thursday agreed to hold high-level talks in early October in Washington.
“Even with the announcement that they’re going to restart trade talks, there’s still uncertainty regarding that issue and fears of slowing demand growth, which is basically keeping the market from pushing higher,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.
The prolonged trade dispute has been a dampener on oil prices, but Brent is still up about 12% this year, helped by production cuts led by the Organization of the Petroleum Exporting Countries and its allies, including Russia.
Nonetheless, both OPEC and Russia boosted production in August, according to a Reuters survey and Russian energy ministry figures.
Also putting downward pressure on prices has been mounting evidence of slowing economic growth worldwide, which has prompted analysts to lower forecasts for oil demand growth.
BP Chief Financial Officer Brian Gilvary told Reuters on Wednesday that global oil demand was expected to grow by less than 1 million barrels per day in 2019, a slowdown from previous years.