By Laila Kearney
NEW YORK (Reuters) - Oil prices were up 1.5% on Wednesday after data showing a steep decline in U.S. crude stockpiles helped ease worries about weakening oil demand caused by the trade war between Washington and Beijing.
U.S. crude oil inventories fell last week by 10 million barrels, compared with analysts' expectations for a decrease of 2.1 million barrels, as imports slowed, the Energy Information Administration said.
"The ongoing trend of narrowing net imports has yielded a massive draw to crude stocks, with imports dropping below 6 million barrels per day, and exports jumping above 3 million barrels per day," said Matt Smith, director of Commodity Research at ClipperData.
"It was an incredibly bullish report, one of the more bullish we've had in a while, with draws across the board and of course the massive crude oil drop, which was generated by another drop in imports," said John Kilduff, a partner at Again Capital in New York. That draw down was likely due to a drop in Saudi exports to the U.S, Kilduff said.
(For a graphic on 'U.S. crude inventories', click https://fingfx.thomsonreuters.com/gfx/editorcharts/US-OIL-STOCKS/0H001QEL67HJ/eikon.png_
A stronger U.S. dollar <.DXY>, which generally moves inversely with oil prices, limited gains in crude futures, on Brexit jitters, Kilduff said.
The dollar rallied as Prime Minister Boris Johnson moved to suspend Britain's parliament for more than a month before Brexit, enraging opponents and raising the stakes in the country's most serious political crisis in decades.
Concerns about the impact of the U.S.-China tariffs war on demand also kept oil prices from rising more.
U.S. President Donald Trump said on Monday that he believed China was sincere about wanting to reach a trade deal, while Chinese Vice Premier Liu He said China was willing to resolve the dispute through "calm" negotiations.
On Tuesday, however, concerns resurfaced after China's foreign ministry said it had not heard of any recent telephone call between the United States and China on trade, and that it hoped Washington could create conditions for talks.
Crude prices have fallen about a fifth from 2019 highs hit in April, partly because of worries that the trade war is hurting the global economy and could dent oil demand.
Morgan Stanley on Wednesday lowered its price outlook for the rest of the year for Brent to around $60 per barrel from $65 and for U.S. crude to $55 per barrel from $58 as it downgraded its demand growth forecast for this year and next.
For a factbox on oil price forecasts click
(Additional reporting by Shadia Nasralla in LONDON and Aaron Sheldrick in TOKYO; Editing by Marguerita Choy and Louise Heavens)
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Updated Date: Aug 29, 2019 00:08:01 IST