By Koustav Samanta
SINGAPORE, Nov 27 (Reuters) - Oil fell on Wednesday after an
industry report showed an unexpected build in U.S. crude
inventories, but optimism around the signing of the first phase
of a U.S.-China trade deal capped a deeper slide in prices.
International benchmark Brent crude futures LCOc1 dropped
19 cents, or 0.3%, to $64.08 a barrel by 0145 GMT on Wednesday.
Brent rose about 1% on Tuesday.
West Texas Intermediate (WTI) crude futures CLc1 fell 17
cents, or 0.29%, to $58.24 per barrel.
Wednesday's decline reversed two days of gains with WTI
climbing 1.1% through Tuesday and Brent gaining 1.4% during the
period on the expectation that China and the United States, the
world's two biggest crude users, would sign a preliminary
agreement that would begin to end their 16-month trade war.
U.S. crude stocks rose by 3.6 million barrels in the week to
Nov. 22 to 449.6 million, compared with analysts' expectations
for a decrease of 418,000 barrels, data from industry group the
American Petroleum Institute showed. API/S
Official inventory data from the U.S. Energy Information
Administration (EIA) is due later on Wednesday. EIA/S
"The surprise crude build disappointed the oil bulls and
likely encouraged some end of day position squaring," said
Stephen Innes, market strategist at AxiTrader.
"But oil prices continue to be driven mainly by U.S.-China
trade news flow, which remains hugely encouraging even more so
after President Trump sounded extremely optimistic, hinting that
a deal was just around the corner."
The United States and China are close to agreement on the
first phase of a trade deal, U.S. President Donald Trump said on
Tuesday, after top negotiators from the two countries spoke by
telephone and agreed to keep working on remaining issues.
The trade dispute between Washington and Beijing, the
world's two biggest economies, has clouded the outlook for
future oil demand and even as a deal is yet to be finalized, any
positive headline tends to support the market.
The Organization of the Petroleum Exporting Countries (OPEC)
and its allies in a production cutting pact, a group known as
OPEC+, will begin holding meetings on Dec. 4 in Vienna to
examine its output policy.
OPEC plans to meet on Dec. 5 and then a meeting of the OPEC+
group on Dec. 6 will make a final announcement on the future
policy. The OPEC+ group agreed to cut oil output by 1.2 million
barrels per day until March 2020 to boost prices. They are
expected to extend the policy, possibly until June.