Oil Holds Gain After Drop in U.S. Inventories Curbs Demand Angst

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Oil Holds Gain After Drop in U.S. Inventories Curbs Demand Angst(Bloomberg) -- Oil held gains after a drop in U.S. inventories eased demand concerns and took attention away from the deepening trade war.Futures in New York edged lower after rallying 4% over the previous two sessions. U.S. stockpiles fell by 10 million barrels last week to to the lowest since October 2018, the Energy Information Administration reported Wednesday. However, a 1.6% increase in American production to a record over the same period tempered the price optimism.The drop in American inventories is evidence that aggressive output cuts by the Organization of Petroleum Exporting Countries and its allies are having an impact on the market. Still, crude is heading for a monthly loss as investors see little chance of a quick fix to the U.S.-China trade conflict, while the growing likelihood of a no-deal Brexit is also stoking demand angst.“Global trade spats will keep downward pressure on oil, limiting prices from rising higher,” said Kim Kwangrae, a commodities analyst at Samsung Futures Inc. in Seoul. The market seems concerned about rising American production and wasn’t as responsive as it might have been to the big drop in inventories, he said.West Texas Intermediate crude for October delivery lost 22 cents, or 0.4%, to $55.56 a barrel on the New York Mercantile Exchange as of 11:33 a.m. in Singapore after swinging between gains and losses earlier. The contract settled 1.6% higher on Wednesday.Brent for October fell 37 cents, or 0.6%, to $60.12 a barrel on the ICE Futures Europe Exchange after closing 1.7% higher on Wednesday. The global benchmark crude traded at a $4.56 premium to WTI.American crude stockpiles fell by 2.3%, the most since mid-July, to 427.8 million barrels last week, the EIA data showed. That was in line with an earlier estimate by the industry-funded American Petroleum Institute. Meanwhile, the nation’s oil output rose to 12.5 million barrels a day, the highest in EIA figures going back to 1983.Trade tensions between Washington and Beijing reached new heights last Friday when China announced retaliatory tariffs against the U.S. and President Donald Trump responded by ratcheting up duties on Chinese products. Treasury Secretary Steven Mnuchin said Wednesday that U.S. trade officials expect Chinese negotiators to visit Washington, but he wouldn’t say whether a previously planned September meeting would take place.\--With assistance from James Thornhill.To contact the reporter on this story: Heesu Lee in Seoul at hlee425@bloomberg.netTo contact the editors responsible for this story: Serene Cheong at scheong20@bloomberg.net, Andrew Janes, Alexander KwiatkowskiFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

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