NEW YORK: Oil prices rose on Wednesday after data showed US crude and fuel inventories drew down more than expected last week, and as US President Donald Trump's optimistic tone over upcoming talks with his Chinese counterpart helped ease economic jitters.
Brent crude futures rose 52 cents, or 0.8%, to settle at US$64.92 a barrel, while US West Texas Intermediate crude futures gained 33 cents, or 0.6%, to close at US$60.48.
US crude oil, gasoline and distillate fuel stockpiles each fell more last week than analysts had expected, data from the US Energy Information Administration showed on Wednesday.
Crude oil stocks fell by nearly 7 million barrels, the data showed, far exceeding the 211,000-barrel drop that was forecast. The big decline forced a reassessment of expectations that the oil market is headed for a large surplus, with the Opec+ group raising output and US production at record levels.
"Where's the glut?" Price Futures Group analyst Phil Flynn said after the report. "The longer the glut doesn't hit, the more we will question whether it exists," he said.
The EIA data also showed strong implied oil demand, UBS analyst Giovanni Staunovo said. Combined with the decline in inventories, the EIA report was very positive for crude oil prices, he said.
Trump predicted a good outcome from his talks with Chinese President Xi Jinping, which are scheduled to take place on Thursday at a summit in South Korea. Also at that summit, the US and South Korea finalised details of a fraught trade deal.
The optimistic note about US-China talks and the deal with South Korea could help alleviate some concerns of a slump in economic activity from Trump's tariffs and trade wars, which have raised concerns around oil demand and weighed on commodity prices in recent months. Still, other concerns continue to plague the global economic outlook.
A divided US Federal Reserve on Wednesday cut interest rates by 25 basis points as expected, but chair Jerome Powell's comments after the central bank meeting struck a note of caution on what lies ahead.
Brent and WTI last week registered their biggest weekly gains since June after Trump imposed Ukraine-related sanctions on Russia for the first time in his second term, targeting major oil companies Lukoil and Rosneft.
However, doubts that sanctions would offset oversupply and talk of another Opec+ output increase pressured prices; both benchmarks fell 1.9%, or more than US$1, in the previous session. Opec+, the world's largest group of oil-producing nations, is leaning towards a modest output boost in December, four sources familiar with the talks said, with two sources citing an additional 137,000 bpd. — Reuters
