Oil prices rose on Thursday buoyed by the long-anticipated signing of an initial Sino-U.S. trade deal that sets the stage for a jump in Chinese purchases of American energy products, while U.S. crude inventories fell more than expected.
U.S. crude was up by 30 cents, or 0.5%, at $58.11 a barrel.
Brent was 30 cents, or 0.5%, higher at $64.30 a barrel .
Under the so-called Phase 1 deal to call a truce in a trade war between the world’s two biggest economies, China committed to buying over $50 billion more of U.S. oil, liquefied natural gas and other energy products over two years.
“It was a formal signing of something which 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 U.S. data showing a much bigger than expected drop in crude oil inventories, which also helped to underpin prices, Chauhan said.
“They were slightly constructive. We saw a counter-seasonal draw in U.S. 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).
Gasoline stocks rose by 6.7 million barrels and distillate stocks were up by 8.2 million barrels, according to the EIA.
U.S. 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 U.S. 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 U.S.-China deal.
UBS said it expects to see Brent trading at the bottom of a range of $60-$65 a barrel in the first half of 2020, as long as there are no supply disruptions in the Middle East.