Oil prices edged higher yesterday after a drawdown in U.S. crude inventories, but lingering concerns over the global economy and a build-up in U.S. refined product stocks kept a lid on gains.
Brent crude futures climbed for a fifth consecutive sessions rising 6 cents, or 0.1 per cent, to $60.36 a barrel while the West Texas Intermediate crude futures rose 10 cents, or 0.2 per cent to $55.78 per barrel.
It would be recalled that the U.S. crude inventories fell more than expected last week as refineries hiked production, but gasoline and distillate stockpiles showed bigger-than-expected builds, the Energy Information Administration, EIA, said on Wednesday.
Crude inventories fell by 2.7 million barrels in the week to August 16, compared with analysts’ expectations for a drop of 1.9 million barrels. However, gasoline stocks rose by 312,000 barrels and distillate supplies grew by 2.6 million barrels.
“Amid mounting market concerns about a slowdown in economic and oil-demand growth, it might come as a surprise that crude oil inventories have actually been plunging,” analysis firm Kayrros said in a note.
Traders were worried on the prospects of global oil demand especially amid lingering trade tensions between U.S and China, the world’s two major economies.
“If trade uncertainties persist it will be difficult for oil to shrug off concerns about the threat to global demand,” said Stephen Innes, a managing partner at Valour Markets.
U.S. President Donald Trump said he was “the chosen one” to address trade imbalances with China, even as congressional researchers warned that his tariffs would reduce U.S. economic output by 0.3% in 2020.