Oil Finds Relief in Surprise US Stockpile Draw and Trade Hopes

A general view shows the Secco Petrochemical complex in Shanghai. China launched yuan-denominated oil futures contracts on March

USA oil inventories shrank the most since January, according to government data on Wednesday, in contrast to a forecast expansion.

The extent to which USA production increases counterbalances output cuts from the Organization of the Petroleum Exporting Countries will be critical, said Gene McGillian, manager of market research at Tradition Energy in Stamford.

U.S. WTI futures were up 29 cents per barrel as of 12:26 p.m. HK/SIN, to $63.66 per barrel Brent crude futures were up 32 cents per barrel to $68.34 per barrel.

Oil fell after China said it would levy tariffs on $50 billion of US imports in retaliation against measures by President Donald Trump, fanning concerns that economic growth and fuel demand could be hurt. Oil held near US$63 a barrel after United States crude stockpiles declined and trade tensions between the United States and China showed tentative signs of easing. The contract rose 50c to $63.51 on Tuesday. Prices erased most of their losses on Wednesday after data showed supplies stored in USA tanks shrank the most since January, in contrast to a forecast for a 2 million-barrel gain.

"Oil prices are profiting from the general brightening of sentiment on the markets as signs emerge that the trade dispute is easing between the US and China", analysts at Commerzbank said in a note. The global benchmark crude traded at a $4.62 premium to June WTI.

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A day earlier, the American Petroleum Institute surprised traders with a crude oil inventory draw of 3.28 million barrels, versus analyst expectations of a modest build.

The cuts run until the end of 2018 but Saudi Arabia has said they could be extended in some form into 2019.

Oil pumping facilities are seen at Venezuela's western Maracaibo lake in Venezuela, November 5, 2007.

U.S. crude oil inventories decreased last week ending March 30, and the refining sector input 141,000 barrels per day more than the previous week's average, the U.S. Energy Information Administration (EIA) said in a report on Wednesday. The API, an energy trade group, also reported a 1.1 million barrel rise in gasoline inventories, reports said.

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