Oil prices rally on bullish US inventory report, global stocks mixed

General view of the US Occidental Petroleum Corporation’s (OXY) industrial plant in Lago Agrio, in the Ecuadorean Amazonia, 2. (AFP pic)

NEW YORK: Oil prices rallied Wednesday following a bullish US petroleum inventory report, while global stocks trod water ahead of key US-China trade talks.

US oil benchmark West Texas Intermediate shot up nearly 3% to finish at US$59.38 a barrel, its highest close since late May after the US Energy Department said oil inventories experienced their biggest weekly drop since September 2016.

The report showed a dip in US oil production and an increase in exports, trends that helped to counter recent concerns about ebbing consumption due to the slowing global economy. Oil prices have also been boosted by rising US tensions with Iran.

Higher oil prices helped boost petroleum producers such as France’s Total, Royal Dutch Shell and ConocoPhillips of the United States.

In another US energy development, Philadelphia Mayor Jim Kenney announced that Philadelphia Energy Solutions had confirmed plans to shut its refinery within the next month following two recent fires.

Officials are working to try to find another buyer, or industrial use for the plant, which employs more than 1,000 people, local media reported.

US-China deal?

Among stock markets, major indices were mixed, with Wall Street finishing close to flat ahead of an expected Group of 20 meeting between US President Donald Trump and Chinese President Xi Jinping that investors hope will result in progress toward resolving the two nations’ year-long trade dispute.

“The market is very subdued this week, taking sort of a pause and a breather before news around the G20 and the debate on interest rates,” said Nate Thooft, senior portfolio manager of Manulife Asset Management.

Analysts say a US-China deal would remove a key uncertainty dogging companies, potentially lifting growth. At the same time, an agreement could also dissuade the Federal Reserve from cutting interest rates. Expectations of that move have lifted stocks in recent weeks.

“Fed statements have been conditioned on bad things happening, with an escalation of the trade war being the main threat,” said a note from Pantheon Macroeconomics. “If that is removed, we see nothing in the US economy to warrant cutting rates.”

In other markets, cryptocurrency bitcoin continued to rally, climbing to US$13,661, according to Bloomberg.