Oil prices were steady on Friday, with crude benchmarks poised for multi-week gains, amid a sharp drawdown in U.S. crude inventories, while trade tensions eased after Washington and Beijing agreed to hold high-level talks next month.
Brent crude was up six cents at 61.01 dollars a barrel by 0339 GMT, while U.S. West Texas Intermediate (WTI) crude was up five cents at 56.35 dollars a barrel.
Both contracts spent the Asian trading session ticking either slightly higher or lower. Brent is set to mark its fourth weekly gain, while U.S. crude is headed for a second weekly rise.
Beijing and Washington on Thursday agreed to hold high-level talks in early October in Washington, cheering investors hoping for an end to the trade war between the world’s two biggest economies that has brought tit-for-tat tariff hikes, chipping away at economic growth.
The prolonged dispute had a dampening effect on oil prices, although they have risen over the year, helped by production cuts led by the Organisation of the Petroleum Exporting Countries and its allies, including Russia, to drain inventories.
“Upside potential for crude oil futures will remain limited, however, as strong U.S. production and demand-side concerns cap bullish gains for the current term,” said Benjamin Lu, commodities analyst at Phillip Futures in Singapore.
He also cited “subdued economic momentum, global trade uncertainties and rising market risks” for reasons to expect that U.S. crude would be range-bound between 55 and 60 dollars over the third quarter.
U.S. crude and product inventories fell last week, with crude drawing down for a third consecutive week despite a jump in imports, the Energy Information Administration (EIA) said.
Crude stocks dropped 4.8 million barrels, nearly double analysts’ expectations, to 423 million barrels, their lowest since October 2018.
Oil prices on Thursday soared more than 2 per cent after the EIA report, although they gradually trimmed gains as investors are not entirely convinced that the Sino-U.S. trade talks will yield results.