Oil Holds Near $63 as Crude Stocks Drop, Trade Tensions Abate

Futures were little changed in New York. U.S. oil inventories shrank the most since January, according to government data Wednesday, in contrast to a forecast expansion. Risk assets, including equities, rallied as Chinese and American officials indicated they’re willing to negotiate on escalating frictions, helping to calm fears that a trade war could derail the strongest global growth in years.

The decline in U.S. stockpiles has boosted optimism that surging shale output may not thwart OPEC’s efforts to drain a glut. While prices have been buoyed by America’s potential withdrawal from a nuclear deal with OPEC producer Iran, a gathering trade conflict between the U.S. and China — the world’s two largest economies — has kept a lid on gains.

Prices are being affected by “a bullish oil-inventory report” from the U.S., said Michael Poulsen, an analyst at Global Risk Management Ltd.

U.S. storage dropped by 4.62 million barrels to 425.3 million barrels last week, while outbound shipments of crude expanded to a record, according to an Energy Information Administration report Wednesday. The EIA data also showed that American oil production rose to an unprecedented 10.5 million barrels a day, topping the 10 million-barrel level for a ninth week.

Global markets from equities to oil recovered after investor optimism grew that the U.S. and China will step back from the brink of a trade war. The Asian nation said Wednesday it would levy an additional 25 percent tariff on about $50 billion of U.S. imports, following which the White House National Economic Council Director Larry Kudlow spent much of the day trying to calm markets.
more at:  https://www.bloomberg.com/news/articles/2018-04-05/oil-gains-as-surprise-stockpile-drop-adds-to-easing-trade-fears