Oil retreats after US inventory rise, but demand hopes stem bigger drop

Oil prices fell on Wednesday after U.S. industry data showed a surprise build in crude inventories, but expectations for firmer demand next year prevented a bigger fall in prices.

The decline followed a gain of more than 1 per cent in the previous session as the “phase one” U.S.-China trade deal announced last week eased pressure on the oil benchmarks. Prior to the deal, oil markets were hampered by worries over the economic impact of the trade dispute between the world’s two biggest oil consumers.

Brent crude futures dropped 33 cents, or 0.5 per cent, to $65.77 a barrel by 0515 GMT on Wednesday. The international benchmark rose 1.2 per cent to $66.10 a barrel on Tuesday.