Oil prices jumped more than 2 percent on Wednesday as the extension of U.S.-China talks raised hopes of easing trade tensions between the two superpowers, but gains were capped by signs of rising U.S. refined product supply.
U.S. West Texas Intermediate (WTI) crude futures rose $1.38 to $51.16 a barrel, a 2.8 percent gain, the first time this year that WTI has topped $50.
Brent crude futures gained $1.34, or 2.3 percent, to $60.06 a barrel.
Prices pared gains after data from the U.S. Energy Information Administration showed domestic crude stockpiles fell less than expected last week. Gasoline and distillate inventories rose more than anticipated.
Crude inventories fell by 1.7 million barrels, smaller than the 2.8 million-barrel draw analysts had expected.
Gasoline inventories rose by 8.1 million barrels, far exceeding analysts` expectations in a Reuters poll for a 3.4 million-barrel gain. Distillate stockpiles rose by 10.6 million barrels, more than five times the expected 1.9 million-barrel increase, the EIA data showed.
"Because of the big builds in products, the report dampened the overall bullish enthusiasm we had earlier in the day," said Phil Flynn, an analyst at Price Futures Group in Chicago.
Still, the day`s sharp gains extended a rally that has pushed prices up more than 10 percent in 2019.
"After a dreadful December for risk markets, crude oil continues to catch a positive vibe," said Stephen Innes at futures brokerage Oanda in Singapore, noting that investors were growing less fearful that U.S.-China trade tensions would slow global economic growth and dampen demand for crude.
The trade talks in Beijing were carried over into an unscheduled third day, amid signs of progress on issues including Chinese purchases of U.S. farm and energy commodities.
State newspaper China Daily said Beijing was keen to end the trade dispute, but that any agreement must involve compromise.
Oil prices also have received support from supply cuts by the Organization of the Petroleum Exporting Countries and allies including Russia.
The OPEC-led cuts, which officially began in January, are aimed at reining in an emerging glut as U.S. crude output has surged to a record 11.7 million bpd.
Top oil exporter Saudi Arabia plans to lower its shipments further in February, Saudi Energy Minister Khalid al-Falih told a news conference in Riyadh.
Morgan Stanley cut its 2019 oil price forecasts by more than 10 percent, with plentiful supply early in the year and slowing imports into China weighing on prices, the bank said in a note.
It now expects Brent to average $61 a barrel this year, and WTI to average around $54 per barrel.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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