NEW YORK (Reuters) – Oil prices edged up on Wednesday as Turkey launched an offensive in Syria that could disrupt crude production in the region and on hopes of progress in ending the U.S.-China trade war, but a build in U.S. crude inventories limited gains.
FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford/File Photo
Brent crude LCOc1 was up 19 cents at $58.43 a barrel by 1:54 p.m. EDT (1754 GMT), and U.S. West Texas Intermediate crude CLc1 was at $52.77, up 14 cents.
Turkey launched a military operation against Kurdish fighters in northeast Syria on Wednesday, President Tayyip Erdogan said, adding the offensive was aimed to eliminate a “terror corridor” along the Turkish border.
Analysts say the attacks could impact the economy of the oil-producing Kurdistan region in Iraq and boost energy prices.
Prices pared gains after U.S. President Donald Trump said the assault on Syria was “a bad idea” not backed by his administration.
Growing U.S. crude stocks also limited oil prices. Crude inventories grew more than expected last week, rising by 2.9 million barrels, compared with analysts’ expectations for an increase of 1.4 million barrels, the Energy Information Administration said.
U.S. crude oil production rose to a fresh record of 12.6 million barrels per day last week.
“The report was mixed, as super-low refinery operating rate undercut domestic crude oil demand,” said John Kilduff, partner at Again Capital LLC in New York. “The low-demand environment more than offset a surge in crude oil exports to just over 3.4 million barrels per day.”
Negotiators from the United States and China, the world’s top two economies, will meet in Washington on Thursday in the latest effort to hammer out a deal aimed at ending a long-running trade dispute that has slowed global growth.
Tensions between the two sides rose this week as the United States imposed visa restrictions on Chinese officials and placed some Chinese companies on a blacklist.
China is still open to agreeing a partial trade deal, Bloomberg reported on Wednesday, citing an official with direct knowledge of the talks.
The Financial Times also reported that China was offering to increase annual purchases of U.S. agricultural products as part of efforts to secure an interim trade agreement with Washington.
“Crude oil has, just like other riskier assets, received a boost from news that China is open to accept a partial trade deal,” Saxo Bank commodity strategist Ole Hansen said.
Commerzbank analyst Carsten Fritsch said if the U.S.-China talks fail, “the oil price risks suffering a renewed slide because concerns about demand would then increase considerably again, especially looking ahead to the coming year.”
Additional reporting by Bozorgmehr Sharafedin in London, Florence Tan in Singapore, Devika Krishna Kumar and Stephanie Kelly in New York; Editing by Nick Macfie and Nick Zieminski