Oil climbs with equities, Saudi Arabia hikes crude grades

By Ayenat Mersie

NEW YORK (Reuters) - Oil prices rose on Thursday, helped by gains in U.S. equities markets and Saudi Arabia's unexpected hike in crude prices, though crude's advance was curbed by strength in the dollar.

Brent crude futures were up 22 cents to $68.24 a barrel at 1:57 p.m. EDT (1757 GMT), and U.S. West Texas Intermediate crude rose 8 cents to $63.45 a barrel.

After a day of concern over tit-for-tat responses between the United States and China over tariffs on various products, market nerves were calmed as U.S. officials said the countries could negotiate.

"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.

 

All three major U.S. stock indexes were higher on Thursday, after the United States said it could negotiate with China on trade issues.

Saudi Arabia's announcement on Thursday that it would increase its official selling prices of May crude supported prices, said Phil Flynn, analyst at Price Futures Group in Chicago.

"It's kind of bullish that they feel like they can justify those higher prices and not lose market share," he said.

The strength of the U.S. dollar, however, was a headwind, analysts said. The U.S. dollar rose to its highest in more than one month against a basket of major currencies <.DXY>. Because oil is dollar-priced, a stronger greenback makes purchases in other currencies more expensive, weighing down oil prices.

Market intelligence firm Genscape said inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, rose 2.5 million barrels for the week to April 3, according to traders who saw the data.

Wednesday's weekly inventory figures showed that U.S. crude stocks unexpectedly declined by 4.6 million barrels in the most recent week.

The extent to which U.S. production, which hit a new high last week, counterbalance output cuts from the Organization of the Petroleum Exporting Countries will be critical, said Gene McGillian, manager of market research at Tradition Energy in Stamford.

The energy minister of OPEC member Qatar told Reuters that the organisation and its allies should maintain supply cuts, which are set to run until the end of 2018.

Saudi Arabia has said they could be extended in some form into 2019.

(Additional reporting by Ahmad Ghaddar in London, Osamu Tsukimori in Tokyo; Editing by Bernadette Baum)