Picture: REUTERS
Picture: REUTERS

London — Oil slipped towards $60 a barrel on Thursday after a report showed US crude inventories rose unexpectedly, although hopes of progress in resolving the US-China trade row lent support.

The American Petroleum Institute (API), an industry group, said on Wednesday that  US crude stockpiles rose by 400,000 barrels last week, while analysts had expected a fall. The government’s official supply report is due out later on Thursday.

Benchmark Brent crude was down 25c at $60.45 a barrel by 8.21am GMT, while US West Texas Intermediate (WTI) crude fell 39c to $55.87.

“Oil prices remain range-bound despite yesterday’s rally,” said Oanda analyst Craig Erlam. “API reported a modest increase in inventories on Wednesday, which failed to do much for oil prices.”

Crude had gained more than 4% on Wednesday as positive Chinese economic data sparked a wider market rally. On Thursday, China’s commerce ministry said Beijing and Washington agreed to hold high-level trade talks in early October.

The prolonged trade dispute has been a dampener on oil prices but Brent is still up 12% this year, helped by production cuts led by oil cartel Opec and its allies, including Russia.

Nonetheless, both Opec and Russia boosted production in August, according to a Reuters survey and Russian energy ministry figures, weighing on prices.

Also putting downward pressure on prices has been mounting evidence of slowing economic growth worldwide, which has prompted analysts to lower forecasts for oil demand growth.

BP CFO Brian Gilvary told Reuters on Wednesday that global oil demand was expected to grow by less than 1-million barrels per day (bpd) in 2019, a slowing from previous years.

Later on Thursday, attention will focus on US government weekly inventory figures from the Energy Information Administration (EIA) to see if they confirm API’s view3pm1500 GMT. Analysts expect crude stocks to have fallen by 2.5-million barrels in the week to August 30.

Reuters