Oil gains on surprise drawdown in USA crude inventories

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Buyers initially supported the markets because the American Petroleum Institute (API) reported a surprise draw of 3.28 million barrels of US crude oil inventories for the week-ending March 30, after analysts had anticipated a modest build in crude oil inventories of 246,000.

WTI and Brent had hit two-week lows on Wednesday after China proposed a broad range of tariffs on United States exports, feeding fears of a trade war.

Futures gained as much as 0.7 percent in NY.

Crude price outlook: Although concerns over geopolitical and trade spats will cap gains, a more optimistic sentiment this week should see Brent trade at US$68/b and WTI at US$64/b.

Brent for June settlement added 28 cents to $68.30 a barrel on the London-based ICE Futures Europe exchange. Prices erased most of their losses on Wednesday after data showed supplies stored in USA tanks shrank the most since January, in contrast to a forecast for a 2 million-barrel gain. China's Ministry of Commerce said it would levy 25 percent tariffs on imports of 106 US products including automobiles and aircraft.

The West Texas Intermediate for May delivery fell 0.14 US dollar to settle at 63.37 dollars a barrel on the New York Mercantile Exchange, while Brent crude for June delivery lost 0.10 dollar to close at 68.02 dollars a barrel on the London ICE Futures Exchange. Analysts had forecast a decline of 1.134 million barrels.

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Global markets from equities to oil recovered after investor optimism grew that the USA and China will step back from the brink of a trade war.

Oil prices rose on Thursday, helped by gains in US equities markets and Saudi Arabia's unexpected hike in crude prices, though crude's advance was curbed by strength in the dollar.

U.S. oil inventories shrank the most since January, according to government data on Wednesday, in contrast to a forecast expansion.

Prices last week rose to a recent high of $71 per barrel, before crashing by 4% early this week and staging a partial recovery on Wednesday.

The API report also showed a build for gasoline for the week-ending March 30 of 1.123 million in gasoline stockpiles.

Output from the 14 members of OPEC dropped to 32.04 million barrels a day in March, the lowest since last April, according to a Bloomberg News survey.