Oil prices continued to climb after the Energy Information Administration (EIA) published the weekly crude inventory report with a larger than expected drawdown. The fall of 4.8 million barrels blew away the forecast of 2.5 million barrels.
The official report squashed doubts of a potential inventory increase as per the API data released yesterday. Crude has been trading higher after the news that China and the United States would restart their trade talks with an important meeting in October.
The drawdown of US crude stock kept pushing oil prices higher with more than 2 percent gains for WTI and Brent. Supply and demand fundamentals have been in the background as the trade war dominated the direction of energy prices.
A possible trade deal in the near term and a softening of the US dollar is summing up to a rebound in oil prices, but traders will keep their eyes peeled for trade news as the optimism could prove fleeting.
The negative effects of the prolonged trade war will still remain even as there is apparent progress from Beijing and Washington. Growth forecasts have been cut as the result as more protectionist measures and energy demand has taken a hit.
An end to the tariff dispute could take oil prices higher as the Organization of the Petroleum Exporting Countries (OPEC) continues to limit production and geopolitics have reduced the supply contributions of Venezuela and Iran.
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