A worker carries containers with oil in Nigeria. Picture: REUTERS/AKINTUNDE AKINLEYE
A worker carries containers with oil in Nigeria. Picture: REUTERS/AKINTUNDE AKINLEYE

Tokyo — Oil prices rose on Thursday after the signing of an initial Sino-US trade deal that sets the stage for a surge in Chinese purchases of American energy products, while US crude inventories fell more than expected.

Brent was 45c, or 0.7%, higher at $64.45 a barrel by 5.10am SA time, while US crude was up by 39c, or 0.7%, at $58.20 a barrel.

Under the first-phase deal to call a truce in a trade war between the world’s two biggest economies, China committed to up its purchases of US oil, liquefied natural gas and other energy products by more than $50bn over two years.

“It was a formal signing of something that had already been agreed, but that has certainly boosted sentiment,” said Virendra Chauhan, oil analyst at Energy Aspects.

Trade sources and analysts said China could struggle to meet the target, and gains in oil are likely to be limited ahead of more detail on how the commitments will be achieved.

Official US data showing a much bigger-than-expected drop in crude oil inventories also helped underpin prices, Chauhan said.

“They were slightly constructive. We saw a counter-seasonal draw in US crude stocks and that generally is supportive,” he said.

Oil inventories fell by 2.5-million barrels, compared with analyst expectations of a drop of 500,000 barrels, according to data from the Energy Information Administration (EIA), an agency of the US department of energy.

Nonetheless, petrol stocks rose by 6.7-million barrels and distillate stocks were up by 8.2-million barrels, the EIA said.

US crude production also rose to a record 13-million barrels per day, the agency said.

Oil prices are returning to range trading, analysts said, as the threat of conflict between Iran and the US receded further after they traded missile and drone attacks earlier this month.

That sent Brent to highs above $71 a barrel, before prices touched more than one-month lows in advance of the signing of the US-China deal.

Reuters

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