Investing.com-- Oil prices rose slightly in early Asian trade on Thursday, sticking to 10-month peaks as signs of another draw in U.S. inventories added to expectations that global crude supplies will tighten further this year.
Focus was also on Chinese trade data due later in the day, with particular interest in crude imports to the world’s largest oil importer, as it grapples with a slowing economic recovery.
Industry data indicated that U.S. crude stockpiles likely shrank for a fourth straight week, as refiners ramped up production on expectations of peak summer travel demand. The data came just a few days after Saudi Arabia and Russia announced bigger-than-expected supply cuts stretching all the way till end-2023.
The cuts triggered a sharp rally in crude, putting prices at their highest levels since early-November. The prospect of tighter global supplies is expected to keep prices elevated in the coming months, and is also expected to help oil markets weather any potential declines in demand.
Brent oil futures rose 0.1% to $90.73 a barrel, while West Texas Intermediate crude futures rose 0.1% to $87.66 a barrel by 20:23 ET (00:23 GMT).
API data shows bigger-than-expected inventory draw
Data from the American Petroleum Institute showed that crude stockpiles shrank 5.5 million barrels (mb) in the week to September 8, more than expectations for a draw of 1.4 mb. The weekly draw came after a substantially bigger-than-expected 11.5 mb reduction in the week to August 25.
The reading usually acts as a precursor to inventory data from the Energy Information Administration, which is due later in the day. U.S. refiners have ramped up production in the past few months to meet increasing fuel demand in the travel-heavy summer season.
Steady weekly inventory draws added to expectations of tighter global supplies in the remainder of the year, especially after the bigger-than-expected Russian and Saudi supply cuts.
But U.S. fuel demand usually tapers off after the Labor Day holiday, leaving some investors questioning whether the steady inventory draws will persist in the coming weeks.
China trade data awaited, oil imports in focus
On the demand front, markets were focused squarely on trade data from China, due later in the day. Overall imports and exports are expected to have declined at a smaller pace in August.
But China’s oil imports will be a particular point of focus, especially after data for July showed a sharp drop in crude shipments to the country.
Chinese refiners were seen building large inventories in the first seven months of the year, which some analysts say accounted for the country’s large oil imports. But this trend may shift in the coming months, especially if economic conditions worsen.
A string of recent economic indicators showed that the world’s second-largest economy remained under pressure through August.