Oil prices headed higher on Thursday after reports out of the United States showed a drawdown in U.S. crude stockpiles that analysts did not expect. Immediately before the Energy Information Administration’s report on Wednesday both WTI and Brent hit two-week lows, pressured by the escalating trade war between China and the U.S. But oil prices rebounded sharply after the EIA reported that U.S. crude inventories dropped by 4.6 million barrels last week, despite analysts’ expectations for an increase of 246,000 barrels. Gasoline stocks dropped by 1.1 million barrels, just under analysts’ expectations for a drop of 1.1 million barrels.
U.S. WTI futures were up 29 cents per barrel as of 12:26 p.m. HK/SIN, to $63.66 per barrel Brent crude futures were up 32 cents per barrel to $68.34 per barrel.
Oil prices have also been supported recently by OPEC’s reduced production which has fallen to an 11-month low due to the production cut agreements and production problems in Libya and Venezuela.
Stock Markets Rest from Downtrend
Asian stock markets rallied on Thursday morning, lifted by optimism that the trade war could be cooled. The Kospi and the Nikkei 225 were up substantially, up 1.47 percent and 1.73 percent respectively. The ASX 200 was up 0.65 percent though the Shanghai Composite and the Hang Seng Index struggled to turn positive.
The markets enjoyed renewed optimism after China threatened the U.S.’s soybean industry, the country’s top agricultural export to China. Soybeans are largely considered one of China’s biggest weapons in the trade war, offering a way to harm the U.S. economy and hurt President Trump politically, since many farming states backed Trump in his presidential election.
Stocks also rallied after Wall Street headed higher, boosted by reports from Bloomberg that President Trump may soften on a critical NAFTA negotiation point. Trump also tried to quell trade war fears on Wednesday, Tweeting that “We are not in a trade war with China.”