Oil prices pushed higher for a second day on Wednesday, buoyed by growing U.S. energy consumption and hopes of progress for a U.S. trade deal with China and India. Brent crude futures rose $1.27 to $62.59 a barrel, while U.S. West Texas Intermediate crude futures climbed $1.26, to $58.50.
U.S. crude oil, gasoline, and distillate inventories fell last week as refining activity and demand strengthened, the Energy Information Administration said on Wednesday. Crude stocks fell by 961,000 barrels to 422.8 million barrels last week, compared with analysts’ expectations in a Reuters poll for a 1.2 million-barrel rise.
“Very impressive for shoulder season,” said Phil Flynn, senior analyst with Price Futures Group. “It shows the demand side of the equation of oil is robust, and the supply numbers are not suggesting this oil glut, at least here in the U.S.”
Investors were also closely watching progress on U.S.-China trade talks as officials from both countries are set to meet this week in Malaysia. U.S. President Donald Trump said on Monday he expected to work out a fair trade deal with Chinese President Xi Jinping, whom he was due to meet in South Korea next week. On Tuesday, however, Trump again added uncertainty, saying the meeting might not happen.
Supply concerns flared on news that a summit between Trump and Russian President Vladimir Putin had been postponed, and on disruption fears as Western governments pressured Asian buyers to reduce purchases of Russian oil.
Trump said he spoke with Indian Prime Minister Narendra Modi on Tuesday, adding that Modi assured him India would be limiting its oil purchases from Russia. “Oil prices climbed after reports suggested the U.S. and India are close to finalizing a trade deal that could see India gradually cut imports of Russian crude, potentially lifting demand for other grades,” said MUFG analyst Soojin Kim. India’s Mint newspaper reported on Wednesday that the two countries were nearing a long-stalled trade agreement that would reduce U.S. tariffs on Indian imports to 15–16% from 50%.