Oil prices rose overnight following media reports that China’s government was open to a partial trade deal with the United States and after Turkey launched a military operation in northern Syria but a build in US crude inventories limited gains.
Brent crude was up 32 US cents at $US58.56 a barrel and US West Texas Intermediate crude was at $US52.98, up 35 US cents.
US crude stocks grew more than expected last week, rising by 2.9 million barrels, compared with analysts’ expectations for an increase of 1.4 million barrels, the Energy Information Administration said.
“We saw a larger-than-expected build in part by two things: refining utilisation rates fell once again – some of the maintenance we’ve been hearing about over the past week is continuing to have an impact,” said Tony Headrick, energy market analyst at CHS Hedging.
“Additionally, total crude oil production rose.”
US crude oil production rose to a fresh record of 12.6 million barrels per day last week.
Negotiators from the United States and China, the world’s top two economies, will meet in Washington DC on Thursday in the latest effort to hammer out a deal aimed at ending a long-running trade dispute that has slowed global growth.
Tensions between the two sides rose this week as the United States imposed visa restrictions on some Chinese officials and placed certain major Chinese companies on a blacklist.
China is still open to agreeing a partial trade deal, Bloomberg reported on Wednesday, citing an official with direct knowledge of the talks.
The Financial Times also reported that China was offering to increase annual purchases of US agricultural products as part of efforts to secure an interim trade agreement.
“Crude oil has, just like other riskier assets, received a boost from news that China is open to accept a partial trade deal,” Saxo Bank commodity strategist Ole Hansen said.
Commerzbank analyst Carsten Fritsch said if the US-China talks fail, “the oil price risks suffering a renewed slide because concerns about demand would then increase considerably again, especially looking ahead to the coming year”.
Turkey launched a military operation into Syria, President Tayyip Erdogan said, adding the offensive aimed to eliminate a “terror corridor” along the Turkish border.
Analysts say the attacks could affect the economy of the oil-producing Kurdistan region in Iraq, and energy prices.
Protests also threatened oil production in Ecuador and Iraq, members of the Organisation of Petroleum Exporting Countries (OPEC).
Saudi Aramco Chief Executive Amin Nasser said there was no doubt Iran was behind September’s attacks on Saudi oil facilities, and warned such strikes may continue if there is no concerted international response.
Authorities in Iran have rejected the allegations.