Oil prices rose after release of weekly crude data showing a 10.8 million barrel drawdown. The news that the US will be sending a team to reopen trade talks with China next week had already pushed crude higher.
The prolonged trade war between the US and China has been a major factor putting downward pressure on global growth and signs of a possible agreement are positive for oil. Energy demand has been forecasted lower by think-tanks if the two largest economies don’t reach an agreement on trade.
West Texas Intermediate and Brent rose more than 1 percent on Tuesday as White House Adviser Kudlow confirmed the delegation traveling to China. The API inventories hinted at a large drawdown in crude with prices gaining on Wednesday by more than 1 percent after the official Energy Information Administration (EIA) data was released.
Concerns about Middle East tensions are keeping oil prices supported as Iran has warned about the presence of naval ships out of the Persian Gulf.
The rise of US production to the point the US is now a net exporter has reduced the impact of geopolitical supply disruptions but crude is not immune to disruptions in one of the largest shipping routes in the world.
A third of oil transported by sea passing through the Strait of Hormuz.