Oil steadies above $60, Jackson Hole summit in focus

Oil steadied above $60 a barrel on Thursday, supported by a drop in U.S. crude inventories and OPEC-led supply cuts, although worries about the global economy weighed.

U.S. crude inventories fell by 2.7 million barrels last week, more than analysts expected. Still, the U.S. Energy Information Administration also said gasoline and distillate inventories rose.

Brent crude rose 15 cents to $60.45 a barrel by 0858 GMT. U.S. West Texas Intermediate crude added 29 cents to $55.97.

Traders across the board are awaiting a speech from Federal Reserve Chairman Jerome Powell on Friday in Jackson Hole, Wyoming that could indicate whether the central bank will continue to cut interest rates.

“Today prices are basically unchanged in the same relatively small range,” said Olivier Jakob of Petromatrix. “The focus now is going to be on Jackson Hole, I think, to the end of the week.”

The price of Brent is up by 12 percent this year, supported by supply cuts led by the Organization of the Petroleum Exporting Countries, and export cuts in Iran and Venezuela which are under U.S. sanctions.

Iran on Wednesday said if its oil exports are cut to zero, international waterways would not have the same security as before, cautioning Washington against raising pressure on Tehran.

But a slowdown in economic growth amid the U.S.-China trade dispute and Brexit has been pressuring prices and forecasters such as the International Energy Agency have been lowering forecasts for world oil demand.

U.S. President Donald Trump on Wednesday said he was “the chosen one” to address trade imbalances with China, even as congressional researchers warned his tariffs would reduce U.S. economic output by 0.3% in 2020.

The Jackson Hole speech is important for oil as signals from the Fed on monetary easing affect the U.S. dollar. A weaker U.S. currency tends to support oil prices, and the dollar eased on Thursday against a basket of currencies.

Analysts warned markets could be volatile.

“With positioning in equities, bonds and energy all heavily weighted to this outcome, the resulting correction from a lack of Powell love could be both ugly and emotional,” said Jeffrey Halley, analyst at OANDA.