Oil Set for Gain as Stockpiles Slide
(Bloomberg) -- Oil is heading for the biggest weekly advance since mid-July as American crude stockpiles shrunk more than forecast, while U.S.-China trade talks look set to continue in Washington next month.
Futures were little changed in New York, poised for a second weekly increase. American crude inventories slid by 4.8 million barrels last week, according to government data Thursday, more than double the draw expected by analysts surveyed by Bloomberg. China and the U.S. said they would proceed with face-to-face negotiations, amid skepticism on both sides that progress can be made.
Oil has been volatile in recent weeks as the tit-for-tat tariff war between the world’s top two economies worsened, fueling concerns demand may be dented further. Still, the global economy has showed improvement as strong American private payrolls data and a better-than-expected reading on the services sector tamped down recession fears in the U.S.
“Oil bulls reveled in the afterglow of government data that reported a solid draw to crude stockpiles,” said Stephen Innes, an Asia-Pacific market strategist at AxiTrader in Bangkok. “Improving global economic data and the trade calming effect from the scheduled talks also are fueling the optimism.”
West Texas Intermediate oil for October delivery lost 3 cents to $56.27 a barrel on the New York Mercantile Exchange as of 8:30 a.m. in London. The contract is up 2.1% this week. It climbed 4 cents Thursday to close at $56.30.
Brent for November settlement dropped 2 cents to $60.93 a barrel on the ICE Futures Europe Exchange. The contract is up 0.8% this week, set for a fourth weekly gain. The global benchmark crude traded at a $4.81 premium to WTI for the same month.
U.S. oil inventories fell for a third week to about 423 million barrels in the period ended Aug. 30, dropping to the lowest level in more than 10 months, according to data from the Energy Information Administration. The median estimate in the Bloomberg survey forecast a 2 million barrel decline.
Chinese Vice Premier Liu He agreed to a visit in “early October” during a telephone call on Thursday with U.S. Treasury Steven Mnuchin and Trade Representative Robert Lighthizer, according to a statement from China’s Ministry of Commerce. A meeting would take place against the threat of increasing U.S. tariffs on Chinese goods, as President Donald Trump’s administration is set to ratchet up levies on Oct. 1 and in December.
--With assistance from James Thornhill.
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