Oil steady as easing U.S.-China tension, U.S. stockdraw support

By Ahmad Ghaddar

LONDON (Reuters) - Oil prices were broadly steady on Thursday as an easing of trade tensions between the United States and China and a surprise draw in U.S. crude inventories last week supported the market.

Brent crude was 2 cents lower at $68 a barrel at 1248 GMT, and U.S. West Texas Intermediate crude was down 11 cents at $63.26 a barrel.

"Oil prices are profiting from the general brightening of sentiment on the markets as signs emerge that the trade dispute is easing between the U.S. and China," analysts at Commerzbank said in a note.

Global equities rose after the United States expressed willingness to negotiate a resolution on trade after proposed U.S. tariffs on $50 billion in Chinese goods prompted a quick response from Beijing that it would retaliate by targeting key American imports.

"I suspect that we are going to have period of wait and see in markets as both parties enter into a period of negotiations before those tariffs actually go into effect," BNP Paribas head of commodities strategy Harry Tchilinguirian told the Reuters Global Oil Forum.

A slightly stronger U.S. dollar weighed on prices. Since oil is dollar-priced, a stronger greenback makes purchases in other currencies more expensive.

WTI and Brent had hit two-week lows on Wednesday after China proposed a broad range of tariffs on U.S. exports, feeding fears of a trade war.

But prices rebounded after U.S. crude inventories fell by 4.6 million barrels last week, compared with analysts' expectations for an increase of 246,000 barrels, according to Energy Information Administration data.

OPEC member Qatar's energy minister told Reuters the organisation should stay the course in its joint cuts with non-OPEC members led by Russia to allow increased investment in the oil industry.

"I would see the need to keep the (OPEC cooperation) momentum ... We need to restore investments. It could take months ... OPEC could start being concerned about gross over-tightening," Mohammed al-Sada said.

The Organization of the Petroleum Exporting Countries and other producers are collectively curbing 1.8 million barrels per day of crude output to help eliminate a glut in oil inventories.

The cuts run until the end of the year but leading OPEC member Saudi Arabia has said they could be extended in one form or another into 2019.

Oil has also received support after a Reuters survey showed on Wednesday that OPEC output fell in March to an 11-month low due to declining Angolan exports, Libyan outages and a further slide in Venezuelan production.

(Additional reporting by Osamu Tsukimori in Tokyo, editing by David Evans)