Oil prices edged higher on Thursday (July 17th), driven by signs of easing trade tensions, stronger-than-expected economic data from the world's major oil consumers, and renewed risks in the Middle East.

Brent crude futures rose 17 cents, or about 0.3%, to $68.67 a barrel at 08:56 GMT. U.S. West Texas Intermediate crude futures rose 31 cents, or 0.5%, to $66.69. "Oil sentiment has shifted away from the Middle East, and the reminder of Israel's incursion into Syria and drone attacks on oil infrastructure in Kurdistan is timely and once again adds a bit of tension to the proceedings," said John Evans, analyst at PVM Oil Associates.

"Any further incident that causes the market to lose barrels will add to the low inventory narrative, and we expect prices to continue to hold steady with any risks to the upside." Drone attacks on oil fields in Iraq's semi-autonomous Kurdistan region have cut crude oil production by 150,000 barrels per day, two energy officials said Wednesday, as infrastructure damage forced some shutdowns.

Meanwhile, US President Donald Trump said letters notifying smaller countries about their US tariffs would be sent soon. This, along with his renewed optimism about the prospects for a drug deal with Beijing and a possible deal with Europe, has helped calm investors.

"Trump softened his tone toward China and proposed lower tariffs for smaller countries, which is seen as a positive development for the global trade outlook," said independent analyst Tina Teng. "Better-than-expected Chinese economic data and a larger-than-expected drawdown in US oil inventories are both positive factors for oil prices."

US crude oil inventories fell by a more-than-expected 3.9 million barrels to 422.2 million barrels last week, the Energy Information Administration (EIA) reported on Wednesday, indicating stronger refinery activity, tighter supplies, and rising demand. However, a larger-than-expected increase in gasoline and diesel inventories limited price gains, raising concerns about weakening demand due to summer travel, ANZ analysts said in a note on Thursday. Data showed that China's crude oil production in June rose 8.5% compared to a year earlier, suggesting stronger fuel demand. (alg)

Source: Reuters