Oil prices climb on uncertainty over possible rise in OPEC output

WTI Crude Oil

The other big uncertainty in markets is potential Chinese tariffs on US crude imports that Beijing may impose in an escalating trade dispute between the United States on one side and China, the European Union and India on the other.

"This shows that China is a significant outlet for USA crude exports and the early indications are that the exports would be much higher in Q2 2018 given the lower WTI-Brent differential which made the arbitrage to Asia look more attractive", Sivanandam noted.

"Our feeling had been there is some complacency built in to that expectation that it is more ploy than policy". "There were proposals but I don't think we can reach an agreement".

The pan-European FTSEurofirst 300 index lost 0.93 percent and MSCI's gauge of stocks across the globe shed 0.63 percent.

Emerging market stocks lost 1.04 per cent.

Argentina's MSCI stock index, however, rose 5.2 percent, its biggest one-day percentage gain since October.

Patrick Pouyanne, the CEO of supermajor Total, also voiced his concern that trade wars are "not good news for the world economy".

Gulf producers usually aligned with Saudi Arabia - the UAE, Kuwait, Oman and Bahrain - have also cautioned against a large output increase and signalled they have been rattled by Riyadh's close coordination with Russian Federation, sources have said.

The Japanese yen strengthened 0.42 per cent versus the greenback at 109.90 per dollar.

Oil prices recovered some day-earlier losses in Asia on Wednesday, supported by a drop in USA commercial crude inventories and the loss of storage capacity in oil producer Libya.

Brent reached a 3-1/2-year high above $80 a barrel last month but has fallen steadily in recent weeks as Saudi Arabia, de facto leader of Opec, has signalled it intends to raise production to stabilise prices.

Iranian Oil Minister Bijan Zanganeh said he still believes OPEC can not reach a compromise decision.

"We hope that there will be an agreement", Iraqi Oil Minister Jabbar al-Luaibi told reporters. On Wednesday, U.S. crude closed at $65.74 a barrel, down from a peak of almost $73 last month, and Brent crude, the global standard, closed at $74.61, down from $80.

WTI crude oil prices ticked higher by 1.4 percent to $65.84/bbl on Wednesday following a drop in USA commercial crude inventories this week, but all eyes will be on Vienna by the end of the week.

The rise came as the July contract expired on Wednesday and as stockpiles in Cushing, Oklahoma declined by 2.3 million barrels in the week to June 19, according to data from market intelligence firm Genscape, traders said. Falling stockpiles could alleviate some concerns that surging US production would outstrip demand.

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