Brent oil held above $60 a barrel on Thursday, withstanding pressure from concerns about economic growth, while a sharp fall in U.S. inventories boosted West Texas Intermediate (WTI) crude futures.
International benchmark Brent crude was up 2 cents at $60.51 a barrel by 1215 GMT. WTI was up 48 cents at $56.26 a barrel.
“If the API (American Petroleum Institute) unexpectedly supplied bullets to oil bulls on Tuesday evening so that they could fire from all cylinders, the EIA flung the door of the ammunition depot wide open yesterday,” Tamas Varga of oil brokerage PVM said.
The U.S. government’s Energy Information Administration said on Wednesday that American crude stocks dropped last week by 10 million barrels, while gasoline and distillate stocks each fell by 2.1 million barrels.
On Tuesday, industry body API said U.S. crude stocks had fallen by 11.1 million barrels last week.
U.S. weekly crude production rose 200,000 barrels per day to a new record at 12.5 million bpd in the week to Aug. 23, the EIA said.
Concerns about a slowdown in economic growth due to the trade war raging between the United States and China, the world’s biggest oil consumers, along with the potential hit to oil demand, are keeping prices in check.
“Trade tensions (are) hanging like a dark cloud threatening to rain over oil prices,” said Jeffrey Halley, senior market analyst at OANDA.
China’s commerce ministry said on Thursday China and the United States were discussing the next round of face-to-face trade talks scheduled for September, but hopes for progress hinged on whether Washington could create favourable conditions.
San Francisco Federal Reserve President Mary Daly said she is in a “watch and see” mode as she assesses the need for another U.S. interest-rate cut for an economy that has “strong” momentum but faces headwinds from uncertainty and a global slowdown.
Concerns about the global economy have watered down the impact of oil production cuts that the Organization of the Petroleum Exporting Countries, Russia and other producers have been exercising over the past 2-1/2 years.
“When they (OPEC and its allies) really managed to accelerate the price from late 2016 onwards they had a big tailwind of global growth acceleration, now they have this big negative headwind of global growth de-acceleration,” said Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB.