Oil prices gain on US trade optimism, crude inventories
HOUSTON
Oil prices rose on Thursday, lifted by expected cuts in Russian gasoline supply and optimism over US trade negotiations that would ease pressure on the global economy, with a further boost from a sharper-than-expected decline in US crude inventories.
Brent crude futures had gained 80 cents, or 1.17 percent, to $69.31 a barrel by 10:52 am CDT (1552 GMT). US West Texas Intermediate crude futures climbed 97 cents, or 1.49 percent to $66.22per barrel.
'Russia looking to cut off gasoline exports gave the market a boost,' said Phil Flynn, senior analyst with Price Futures Group. 'The market was looking for a reason to gohigher.'
Three industry sources told Reuters that Russia was considering a tighter export ban as early as Monday that would include fuel producers.
The restrictions will exclude supplies to the Moscow-led Eurasian Economic Union, a group of five former Soviet states, and to countries such as Mongolia with which Russia has intergovernmental agreements on fuel supplies, the sources said.
Early in the session, futures rose on the previous day's report of a US crude inventory draw and on hopes for a trade deal between the US and the European Union that would lower tariffs.
'The US crude inventory draw and the trade efforts are adding some support to prices,' said Janiv Shah, an analyst at Rystad.
On Wednesday, two European diplomats said the EU and the US were moving toward a trade deal that could include a 15 percent US baseline tariff on EU imports and possible exemptions. This could pave the way for another major trade agreement following the Japan deal.
Also on Wednesday, US Energy Information Administration data showed crude inventories fell last week by 3.2 million barrels to 419 million barrels, far exceeding analysts' expectations in a Reuters poll for a 1.6 million-barrel draw.
Oil prices were also supported by a suspension of Azeri crude exports from the Turkish port of Ceyhan and a brief halt to loadings at Russia's main Black Sea ports which has since been resolved.
BP said organic chlorides were detected in some of the oil tanks in the terminal at Ceyhan, adding that oil loading continued from some of the tanks with chloride levels assessed to be within normal specifications, while export activities via the BTC pipeline also continued.
Traders will watch for further news on loadings from Ceyhan and Novorossiysk, which together make up around 2.5 percent of global oil supply at 2.5 million barrels per day, according to Reuters calculations based on loading data from the region.
Analysts expect limits to further oil price gains.
'Uncertainty over US-China trade talks and peace negotiations between Ukraine and Russia is limiting further gains,' said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, a unit of Nissan Securities, predicting WTI would likely remain range-bound between $60 and $70 a barrel.
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