Oil rose today, erasing earlier losses, as investors weighed a sizable drop in U.S. crude inventories amid China’s latest indication that it won’t escalate the ongoing trade war with the U.S.
Futures in New York rose as much as 0.8 per cent following an almost four per cent rally over the previous two sessions. European and U.S. equities also pared earlier declines on Thursday as a spokesman for China’s commerce ministry signaled that the country wouldn’t immediately retaliate against the latest U.S. tariff increase, saying that it was more important to discuss removing the extra duties.
U.S. crude stockpiles fell by 10 million bbls last week, to the lowest since October 2018, the country’s Energy Information Administration reported. However, an increase in U.S. oil production to a record tempered prices. Crude futures in New York and London are heading for a monthly loss as prices have been whipsawed by the ongoing U.S.-China trade war.
“These gains still remain fragile,” says BNP Paribas head of commodity markets strategy Harry Tchilinguirian. “It would not take much in terms of negative economic news tied to U.S.-China trade relations to send the oil price back down.”
West Texas Intermediate for October delivery added 38 cents, or 0.7 per cent, to US$56.16/bbl on the New York Mercantile Exchange as of 11:17 a.m. in London after falling as much as 35 cents earlier. Brent for the same month fell three cents, or 0.1 per cent, to US$60.46/bbl on the ICE Futures Europe Exchange. The global benchmark crude traded at a $4.32 premium to WTI.
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