SINGAPORE (Reuters) – Oil prices rose on Thursday following a drawdown in U.S. crude inventories, but gains in fuel inventories and persistent concerns over the global economy and future demand outlook capped gains.
FILE PHOTO: A pump jack operates at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford
Brent crude futures LCOc1 climbed 27 cents, or 0.5%, to $60.57 a barrel by 0051 GMT on Thursday.
West Texas Intermediate (WTI) crude CLc1 futures rose 35 cents, or 0.6%, to $56.03 per barrel.
U.S. crude inventories fell more than expected last week as refineries hiked production, but gasoline and distillate stockpiles showed bigger-than-expected builds, the Energy Information Administration said on Wednesday.
Crude inventories USOILC=ECI fell by 2.7 million barrels in the week to Aug. 16, compared with analysts’ expectations for a drop of 1.9 million barrels. However, gasoline stocks USOILG=ECI rose by 312,000 barrels and distillate supplies USOILD=ECI grew by 2.6 million barrels.
“With two weeks left in the critical driving season, the surprising build in U.S. fuel inventories is being viewed as a counter-seasonal Grim Reaper of sorts suggesting that gasoline demand has peaked, and the worst is yet to come,” said Stephen Innes, a managing partner at Valour Markets.
“If trade uncertainties persist it will be difficult for oil to shrug off concerns about the threat to global demand,” Innes added.
U.S. President Donald Trump on Wednesday said he was “the chosen one” to address trade imbalances with China, even as congressional researchers warned that his tariffs would reduce U.S. economic output by 0.3% in 2020.
Trump defended his actions and said he believed a trade deal between the world’s largest economies was still possible.
Asian shares edged ahead on Thursday after Wall Street got a boost from strong retail results, but minutes of the Federal Reserve’s July meeting showed policymakers were deeply divided over whether to cut interest rates as sharply as markets were wagering.
Meanwhile, oil markets were also supported by simmering tensions between the United States and Iran, with Iranian President Hassan Rouhani cautioning Washington against tightening pressure on Tehran.
If Iran’s oil exports are cut to zero, international waterways will not have the same security as before, Rouhani said on Wednesday.
Echoing Rouhani’s tone, Iranian Foreign Minister Mohammad Javad Zarif said Tehran might act “unpredictably” in response to U.S. policies under President Donald Trump.
Reporting by Koustav Samanta; editing by Richard Pullin