Oil extends gains amid easing US-China trade tensions

Working oil pumps silhouette.

Oil extended an advance after a US industry report signalled a bigger-than-expected draw in nationwide crude inventories and as trade tensions eased between the world’s two largest economies.

Futures in New York added as much as 2.2 per cent after climbing 1.3 per cent Tuesday.

US stockpiles fell by more than 10 million barrels last week, the industry-funded American Petroleum Institute was said to report before government data that’s forecast to show a smaller drop Wednesday.

Meanwhile, trade tensions receded as China moved to lower duties on US vehicle imports.

Crude remains in a bear market after slumping from a four-year high in early October, even though OPEC and its allies have pledged substantial output cuts to check a growing surplus.

Traders remain concerned that record American production will continue to flood world markets, and skeptical that all the countries in the OPEC+ coalition will scale back supplies as promised.

 “The oil market is regaining further ground this morning in the wake of a bullish API report concerning US oil stockpiles,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London.

Global benchmark

West Texas Intermediate for January delivery gained as much as $1.15 to $52.80 a barrel on the New York Mercantile Exchange, and traded at $52.61 as of 10:31am London time.

Prices increased 65 cents to $51.65 on Tuesday, after posting a 3.1 percent drop in the previous session.

Total volume traded Wednesday was 34 percent above the 100-day average.

Brent for February settlement rose $1.02 to $61.22 a barrel on London’s ICE Futures Europe exchange, after adding 0.4 percent on Tuesday.