By Colleen Howe
BEIJING (Reuters) -Oil prices held on to most gains from the previous session in early trading on Thursday as investors awaited U.S.-China trade talks later in the day, hoping for signs that tensions clouding the economic growth outlook will ease.
Brent crude futures fell 3 cents, or 0.05%, to $64.89 a barrel by 0032 GMT, while U.S. West Texas Intermediate crude futures fell 11 cents, or 0.18%, to $60.37.
U.S. President Donald Trump and Chinese President Xi Jinping will meet on Thursday in Busan, South Korea, on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit. Markets hope they will agree to dial down trade tensions that have hurt the outlook for global growth and fuel demand.
Trump said on Wednesday he expects to reduce U.S. tariffs on Chinese goods in exchange for Beijing’s commitment to curb the flow of precursor chemicals to make the drug fentanyl.
Also boosting the economic outlook, the U.S. Federal Reserve lowered interest rates on Wednesday, in line with market expectations. However, it signaled that might be the last cut of the year as the ongoing government shutdown threatens data availability.
“The Fed’s decision underscores a broader turn in its policy cycle – one that favours gradual reflation and support over restraint, providing a tailwind to commodities sensitive to economic activity,” Rystad Energy’s chief economist Claudio Galimberti said in a note.
Brent and WTI rose 52 cents and 33 cents, respectively, in the previous session on optimism about the trade talks and a larger than expected drawdown in U.S. crude and fuel inventories.
Crude inventories dropped by 6.86 million barrels to 416 million barrels in the week ended October 24, the EIA said, compared with analysts’ expectations in a Reuters poll for a 211,000-barrel fall.
(Reporting by Colleen Howe; Editing by Kim Coghill)
Comments