U.S. oil edges up as investors weigh rise in supplies and Sino-American trade progress

U.S. oil futures were trading slightly higher on Thursday, even as a late-Wednesday inventory report showed that domestic supplies were growing. Tentative optimism on the Sino-American trade front was providing some lift to international oil, with hope that progress in tariff negotiations might ease concerns about a global slowdown that could dent the appetite for crude.

West Texas Intermediate crude for October delivery CLV19, +0.84% picked up 15 cents, or 0.3%, to trade at $56.40 a barrel on the New York Mercantile Exchange after a 4.3% rally on Wednesday, which marked the biggest dollar and percentage gain since July 10, according to Dow Jones Market Data.

The global benchmark, November Brent crude BRNX19, +1.10%, rose 36 cents, or 0.6%, at $61.07 a barrel on ICE Futures Europe, following a 4.2% rally a day ago.

The American Petroleum Institute reported U.S. crude supplies rose by 401,000 barrels for the week ended Aug. 30, according to sources. The API data, which were released a day later than usual because of the U.S. Labor Day holiday, also reportedly showed a stockpile decline of 877,000 barrels in gasoline, while distillate supplies fell by 1.2 million barrels.

Weekly inventory data from the more closely followed U.S. Energy Information Administration will be released later Thursday at 10:30 a.m. Eastern Time.

The EIA data are expected to show crude inventories down by 3 million barrels last week, according to a survey of analysts polled by S&P Global Platts. Gasoline supplies are forecast to fall by 1.9 million barrels, while distillate stockpiles are seen lower by 120,000 barrels.

Any weakness in oil trading on Thursday may be mitigated by reports late Wednesday that the U.S. and China had set a tentative date in early October to resume negotiations to resolve a yearlong dispute on import duties and intellectual property rights that have arguably provided the most severe headwind for oil prices rising. China is one of biggest consumers and importers of crude oil, and the tariff conflict has threatened to create a global slowdown, damaging demand for crude products.

“Oil did not see a significant rally following the Chinese announcement of trade progress, because the API report last night showed a surprise slight rise with crude inventories,” wrote Edward Moya, senior market analyst at Oanda, in a Thursday research note.

“In order for trade headlines to positively impact oil prices, a removal of tariffs or the upcoming deadlines would need to take place to see energy traders get excited,” he said.

Elsewhere on Nymex, October gasoline RBV19, +1.31% picked up 0.1% to $1.536 a gallon, while October heating oil HOV19, +0.86% added 0.2% to $1.885 a gallon.

October natural gas NGV19, -0.65% edged less than 0.1% lower to $2.444 per million British thermal units.

MarketWatch

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Ed Moya

Ed Moya

Senior Market Analyst - The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geopolitical events and monetary policies around the world. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC and Bloomberg, and is often quoted in leading publications including the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University.
Ed Moya