Oil gains after US-China trade deal, fall in inventories

Oil prices rose on Thursday after the signing of an initial Sino-US trade deal that sets the stage for a surge in Chinese purchases of American energy products, while US crude inventories fell more than expected.

Brent was 45 cents, or 0.7%, higher at $64.45 a barrel by 0310 GMT, while US crude was up by 39 cents, or 0.7%, at $58.20 a barrel.

Under the so-called Phase 1 deal to call a truce in a trade war between the world's two biggest economies, China committed to buying over $50 billion more of US oil, liquefied natural gas and other energy products over two years.

Trade sources and analysts said China could struggle to meet the target and gains in oil are likely to be limited ahead of more detail on how the commitments will be achieved.

Official US data showing a much bigger than expected drop in crude oil inventories, also helped underpin prices, Chauhan said.

Oil inventories fell by 2.5 million barrels, compared with analyst expectations of a drop of 500,000 barrels, according to data from the Energy Information Administration (EIA), an agency of the US Department of Energy.

US crude production also rose to a record 13 million barrels per day, the agency said.