Oil gains on surprise drawdown in USA crude inventories

Oil gains on surprise drawdown in USA crude inventories

Oil gains on surprise drawdown in USA crude inventories

Oil markets stabilised on Monday after slumping around 2 percent last Friday on concerns over an intensifying trade dispute between the United States and China, as well as increased US drilling activity.

Oil markets stabilized on Monday after having lost around 2 percent last Friday as concerns grew over the impact on global growth from an intensifying trade dispute between the United States and China, as well as increased USA drilling activity.

Light, sweet crude for May delivery rose $1.29, or 2%, to $64.71 a barrel on the New York Mercantile Exchange, trading at a one-week high.

Brent crude futures were at $68.97 per barrel at 0417 GMT, up 32 cents, or 0.5 percent, from their last close.

U.S. WTI crude futures were up 25 cents at $62.31 a barrel.

Analysts said Xi's comments greatly relieved market anxiety for a potential trade war between the world's two largest economies.

"There are headlines of a USA carrier group heading to the Middle East, the Saudis are looking for $80 Brent crude, and this is ahead of API inventories", said Roberto Friedlander, head of energy trading at Seaport Global Securities.

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"Oil prices have been susceptible to the brewing trade tensions between China and the USA ..."

Analysts and traders have recently warned that booming USA shale oil production could potentially derail OPEC's effort to end a supply glut.

The American Petroleum Institute will publish storage data later today while the US Energy Information Administration releases its monthly report on US production. U.S. President Donald Trump promised a "major response" within 24 to 48 hours to an alleged chemical attack in Syria, which he said could be the work of the Syrian government, Iran, Russia or all three.

"Oil prices remain rangebound with WTI oil right in the middle of the $60-$65 per barrel range that has largely held since January of this year", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

However, soaring United States crude production, which has jumped by a quarter since mid-2016, threatens to undermine Opec's efforts.

Saudi Arabia Energy Minister Khalid al-Falih said on Wednesday that the world's biggest exporter of crude oil will not sit by and let another supply glut surface, implying that the de-facto leader of the oil producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) would continue to withhold supply in order to tighten markets and prop up prices.

The U.S. late previous year overtook Saudi Arabia as the world's second-biggest crude producer. Only Russia pumps more crude out of the ground, at nearly 11 million bpd.

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