LONDON (Bloomberg) -- Signs of easing tensions between the world’s two largest economies have done little to lift oil as surging U.S. stockpiles offset potential gains in crude futures.

Oil in New York was little changed while crude in London rose just 0.2% despite the announcement that the U.S and China are to resume trade talks in an attempt to diffuse geopolitical tensions between the two countries.

A breakdown in negotiations between the U.S. and China two months ago stoked concern that global economic growth could slow, potentially curbing energy consumption. A standoff between the U.S. and Turkey subsequently sparked fears of contagion among emerging markets. A surprise gain in U.S. oil inventories last week has also weighed on crude futures.

"The weekly U.S. inventory report from EIA has been the main driver of oil prices over the (past) day," said Jens Naervig Pedersen, senior analyst at Danske Bank. "Inventories rose more than expected and reported by API on Tuesday which pushed both Brent and WTI lower yesterday."
Rangebound Futures

West Texas Intermediate crude for September delivery gained 3 cents to $65.09/bbl on the New York Mercantile Exchange in London. The contract slumped $2.03 Wednesday to $65.01. Average volume traded Thursday was about 15% below the 100-day average.

Brent for October settlement rose $0.17 to $70.93/bbl on the London-based ICE Futures Europe exchange. Prices dropped $1.70 to $70.76 on Wednesday, capping a decline of more than 5% since the middle of last week. The global benchmark crude traded at a $6.26 premium to U.S. benchmark WTI for the same month.

China will dispatch Vice Commerce Minister Wang Shouwen to the U.S. in late August for low-level trade talks in the first official exchanges since negotiations broke down. The two nations had appeared to have reached a deal in May, but U.S. President Donald Trump backed away from the agreement a few days later. Washington and Beijing have since been locked in a trade standoff as each slapped tariffs on billions of dollars of each other’s goods.

This revival in trade talks "could give support to oil prices if it leads to a substantial turn around in sentiment around the global trade war," Pedersen said.

Meanwhile, an unexpected gain in U.S. crude inventories weighed on prices. Nationwide stockpiles rose by 6.81 MMbbl last week, the most since 2017, while those at the Cushing storage hub in Oklahoma expanded for the first time since May.

Oil Market News

In November, U.S. sanctions on Iran are due to enter into force that could drive down the Persian Gulf nation’s exports and upend the global oil market. Asian commodity powerhouse Indonesia is tightening the noose around its natural resources. Commodities recovered some of their poise after Wednesday’s plunge as trade tensions eased between China and the U.S. Kua Aik Hong has joined Exxon Mobil as an oil-products trader based in Singapore.