US oil prices inch up amid stockpile drop, signs of easing trade tensions

SingaporeUpdated: Dec 13, 2018, 07:07 AM IST
main img

A general view of the drilling platform, the first out of four oil platforms to be installed at Norway's giant offshore. Photograph:(Reuters)

Story highlights

US West Texas Intermediate (WTI) crude futures were at $51.27 per barrel at 0020 GMT, up 0.23 per cent from their last settlement.

US oil prices edged up on Thursday, buoyed by a drawdown in inventories and by signs of easing trade tensions between Washington and Beijing.

Oil prices have also been supported by OPEC-led supply curbs announced last week, although gains have been muted after the producer group lowered its 2019 demand forecast.

US West Texas Intermediate (WTI) crude futures were at $51.27 per barrel at 0020 GMT, up 0.23 per cent from their last settlement.

International Brent crude oil futures had yet to trade.

"Crude oil prices rose, helped by the easing trade tension, as well as a fall in inventories," ANZ bank said on Thursday.

"The news that China is looking to redraft its 'Made in China' 2025 plan boosted hopes that trade talks are progressing better than expected."

China appears to be easing its high-tech industrial development push, dubbed 'Made in China 2025', which has long irked the United States, amid talks between the two countries to reduce trade tensions, according to new guidance to local governments.

A drop in US crude stockpiles, though less than expected, has helped boost sentiment, analysts said.

US crude inventories fell by 1.2 million barrels in the week to December 7, compared with market expectations for a decrease of 3 million barrels. 

Meanwhile, the Organisation of the Petroleum Exporting Countries (OPEC) said 2019 demand for its crude would fall to 31.44 million barrels per day, 100,000 bpd less than predicted last month and 1.53 million less than it currently produces.

This adds to the concerns of several market watchers that the decision led by the group to cut production by 1.2 million bpd overall might not be enough to override a glut, especially on the back of soaring US output.

"Oil markets have been concerned about the possibility of weaker macroeconomic and oil demand growth; when combined with booming US shale output, this could keep markets oversupplied in 2019, even with the OPEC+ cut," Societe Generale analyst Michael Wittner said in a note.

"At this point, the OPEC+ cuts appear to have merely put a floor under prices."

The United States, where crude production has hit a record 11.7 million bpd, is set to end 2018 as the world's top oil producer, ahead of Russia and Saudi Arabia.