The volume of U.S. crude oil in storage should decrease in coming weeks before reversing course with the end of peak driving season and the start of significant refinery maintenance work, said Andrew Lipow, president at Lipow Oil Associates in Houston. Crude prices had gained more than 4% on Wednesday as positive Chinese economic data sparked a wider market rally.
On Thursday, China said Beijing and Washington had agreed to hold high-level trade talks in early October, which helped boost prices as investors hoped for an easing of the trade war between the world’s two top economies that has taken a toll on global growth. However, the market remained cautious than any deal would come together soon, limiting the oil rally. “I think the market across the board has built in as much hopefulness as they can about the U.S.-China trade war,” said John Kilduff, a partner at Again Capital in New York.
The prolonged U.S.-China trade dispute has been a dampener on oil prices, but Brent is still up about 12% this year, helped by production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia. Nonetheless, both OPEC and Russia boosted production in August, according to a Reuters survey and Russian energy ministry figures, weighing on prices. Also putting downward pressure on prices has been mounting evidence of slowing economic growth worldwide, which has prompted analysts to lower forecasts for oil demand growth.
