Brent crude settled above the $60 per barrel barrier as markets continued to be preoccupied with slowing global growth.
The grade advanced to $60.43 per barrel while WTI rose to $55.11 per barrel.
While economic growth concerns remain amid the ongoing trade war dispute, crude oil balances are tightening. Meanwhile, geopolitical developments remained a key concern and could have a big impact on crude trading activities in Asia.
It is still questionable if US crude oil exports to China will resume after Beijing planed to levy 5 percent tariff on US crude imports from September.
However, as the US-China trade tensions are Asia-centric matters, China’s surprise decision to include crude oil in its latest round of tariffs on imports from the US is unlikely to restrict the overall US- Asia crude trade.
American oil has ample outlets in Asia and other Asian refiners may also absorb China’s unwanted US crude cargoes.
US crude oil inventories fell sharply to their lowest since last October last year, while Russian crude oil exports also fell to an 18-month low of 4.51 million barrels per day (bpd).
US crude production rose 200,000 bpd to a new weekly record at 12.5 million bpd, challenging assumptions of slowing growth among the market bears.
Despite rising production, crude oil balances appear to be tightening amid OPEC+ output cuts and historically high compliance rates.
OPEC supply cuts are likely one of the main reasons fro the draining of US oil inventories.
In its August Short-Term Energy Outlook, the EIA expects refinery runs to average 17 million bpd in 2019. Refinery runs will increase to 17.6 million bpd in 2020 because of increases in both refining capacity and utilization. Strong refining margins encourage high runs.
This explains the net US crude imports decline to 2.9 million bpd, while imports to the Gulf Coast region dropped to their lowest on record at 1.2 million bpd, based on EIA data going back to 1990. Total US crude imports fell to 5.93 million bpd.
EIA data showed US refining utilization at 95.2 percent of total capacity. Gasoline stocks fell by 2.1 million barrels. Distillate stockpiles, which include diesel and heating oil, also fell by 2.1 million barrels.