Crude prices rose to a four-month high above $60 a barrel after government data showed tightening oil supplies in the United States, but gains were capped by concerns over global economic growth due to the ongoing U.S.-China trade dispute.
The front-month U.S. West Texas Intermediate (WTI) crude futures contract, which expires Wednesday, gained 82 cents, or 1.4 percent, to $59.85 a barrel by 12:12 p.m. EDT (1612 GMT). It earlier hit $60.03 a barrel, the highest since Nov. 12. The more-active second-month WTI benchmark gained 77 cents to $60.06 a barrel.
International Brent crude rose 78 cents, or 1.2 percent, to $68.39 a barrel. Prices rose after the U.S. Energy Information Administration posted a large and unexpected drop in crude inventories due to strong export and refining demand.
Stockpiles fell 9.6 million barrels last week, compared with analysts’ expectations for an increase of 309,000 barrels. The draw was the largest since July 2018 and brought stockpiles to their lowest since January.
“This is pretty much a bullish trifecta when it comes to supplies,” said Phil Flynn, analyst at Price Futures Group in Chicago. “We’re starting to see the impact of the OPEC production cuts. We’re seeing the impact of the Venezuelan cuts.”
Crude prices have risen almost a third this year, pushed up by supply cuts among the Organization of the Petroleum Exporting Countries and its allies including Russia, as well as U.S. sanctions against oil exporters Iran and Venezuela.
The United Arab Emirates’s energy minister said he expects OPEC to finalize the long-term cooperation charter with its non-OPEC partners in June.
Rating agency S&P Global raised its Brent oil price assumptions back up to $60 a barrel, on the back of the production cuts by OPEC and Russia.
However, an eight-month trade spat between China and the United States has worried global markets already concerned by signs of a slowdown in economic growth this year.
There have been mixed signals that the standoff between the world’s top two economies can soon be resolved.
A Bloomberg report on Tuesday, citing concern among U.S. officials that China is pushing back on American demands, briefly weakened oil prices before both benchmarks again approached four-month highs.