Oil steady after US stockpile build, Saudi Arabia price cuts
Oil prices steadied on Thursday after falling more than 1% the previous day because of a build in U.S. gasoline and diesel inventories and cuts to Saudi Arabia's July prices for Asia.
Brent crude futures were up 23 cents, or 0.35%, at $65.09 a barrel by 1148 GMT. U.S. West Texas Intermediate crude gained 16 cents, or 0.25%, to $63.01 a barrel.
Oil prices closed around 1% lower on Wednesday after official data showed that U.S. gasoline and distillate stockpiles grew more than expected, reflecting weaker demand in the world's largest economy.
Geopolitics and the Canadian wildfires, which can reduce oil production, provide price support despite a potentially over-supplied market in the second half of the year with expected OPEC+ production hikes, PVM analyst Tamas Varga said.
Adding to the weakness, Saudi Arabia, the world's biggest oil exporter, cut its July prices for Asian crude buyers to nearly the lowest in two months.
The price cut by Saudi Arabia followed the OPEC+ move over the weekend to increase output by 411,000 barrels per day (bpd) for July.
The strategy of OPEC's de facto leader Saudi Arabia is partly to punish over-producers by potentially unwinding 2.2 million bpd between June and the end of October, in a bid to wrestle back market share, Reuters previously reported.
"Oil demand will be shaped by trade negotiations between the US and its trading partners," PVM's Varga said.
Data on Wednesday showed that the U.S. services sector contracted in May for the first time in nearly a year.
On the trade front, U.S. President Donald Trump said on Wednesday that China's Xi Jinping was tough and "extremely hard to make a deal with", exposing friction between Beijing and Washington.
Investors will watch U.S. economic data such as payrolls, which may influence the U.S. Federal Reserve's interest rate policy, while focus will be also on geopolitical tensions in the Middle East, UBS analyst Giovanni Staunovo said.
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