Oil nudges up on trade optimism but Saudi supply weighs

Oil steadied on Thursday due to optimism that the United States and China could resolve their trade dispute, though prices came under pressure from Saudi Arabia’s moves to restore output quickly after attacks on its oil installations.
Brent crude LCOc1 futures were at 62.55 dollars a barrel, up 16 cents or 0.26 per cent, by 0856 GMT.
U.S. West Texas Intermediate (WTI) crude futures CLc1 gained 13 cents, or 0.23 per cent, to 56.62 dollars a barrel.
U.S. President Donald Trump signaled on Wednesday that a resolution to the dispute with China might be near, which could eventually boost fuel demand.
A day after delivering a stinging rebuke to China over its trade policies, Trump said Beijing wanted to make a deal “very badly” and that a deal “could happen sooner than you think”.
Trump and Japanese Prime Minister Shinzo Abe also signed a limited trade deal that would open Japanese markets to some 7 billion dollar of U.S. products annually.
“Trade deals are what investors are really interested in,” OANDA senior market analyst Craig Erlam said.
“It amazes me that these soothing tones still draw investors in, given how often we’ve heard them in the past. But they can be a needy bunch, seeking constant reassurance that everything is going to be OK.”
On Wednesday, Brent and WTI fell to their lowest since the September 14 attacks on Saudi Arabia.
Prices were weighed down by a surprise 2.4-million-barrel build in U.S. crude inventories last week, and a faster-than-expected recovery of Saudi output after the drone and missile strikes on two of its oil-processing plants.
The world’s top oil exporter has restored its production capacity to 11.3 million barrels per day, sources briefed on Saudi Aramco’s operations told Reuters.
“The oil market has seemingly returned to business as usual,” said Norbert Ruecker, head of economics and next-generation research at Julius Baer.
“Instead of the attack-related fallout including disruption and geopolitical risks, the soft economy and stagnant oil demand are back in focus.”
Crude futures were pressured by sluggish economic data in leading European economies and Japan.
A firmer dollar DXY, which posted its sharpest daily gain in three months overnight and held steady in Asian trade, also weighed on oil as it makes dollar-traded fuel imports more costly for countries using other currencies.