Oil steadies above $64 as trade hopes offset US inventories

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Oil steadied above $64 a barrel on Wednesday as concerns about a report showing a surprise boost in US crude inventories were offset by optimism that a US-China trade deal would be agreed soon.

Oil industry group the American Petroleum Institute on Tuesday said US crude inventories rose by 3.6 million barrels, compared with analysts’ expectations for a decrease. The US government’s supply report is due later on Wednesday.

Benchmark Brent crude was up 7 cents at $64.34 a barrel by 1440 GMT. US West Texas Intermediate crude fell 18 cents to $58.23.

Oil has risen for the last two days on expectations that China and the United States, the world’s two biggest crude users, would soon sign a preliminary agreement, signaling an end to their 16-month trade dispute.

“Trade deal optimism persists,” said Tamas Varga of oil broker PVM. “The belief in a positive trade deal continues unabated.”

That was fueled by comments from President Donald Trump, who said on Tuesday the United States and China were close to agreement after top negotiators spoke by telephone and agreed to keep working on remaining issues.

Attention will focus later on Wednesday on the weekly oil supply report from the US Energy Information Administration, which is due at 1530 GMT.

“If the numbers are similar to the API, this would be the fifth straight week of stockbuilds, and would not be the most constructive reading for WTI as we head into the Thanksgiving holiday,” ING analyst Warren Patterson said in a note.

Expectations that the Organization of the Petroleum Exporting Countries and allies such as Russia will maintain their deal to restrain supply have supported prices.

The producers, known as OPEC+, hold their next oil policy review meetings on December 5-6 in Vienna. They are expected to extend their supply cut agreement further into 2020.

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