U.S. crude oil inventories decrease in past week

A sharp spike in the crude oil prices will also reverse the declining trend on inflation and put pressure on central and state governments to cut taxes on petrol and diesel

A sharp spike in the crude oil prices will also reverse the declining trend on inflation and put pressure on central and state governments to cut taxes on petrol and diesel

"Equities have been the most significant external driver for the short-term price direction of oil, with the significant volatility coming (partly) from the perception of a trade war", said Dominic Chirichella, senior partner at the Energy Management Institute in NY.

The extent to which US production increases counterbalances 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.

But BNP's Mr. Tchilinguirian said the oil market may likely "look past" any inventory data until the implications of the U.S. Still, government data due on Wednesday is forecast to show stockpiles rose for the fifth time in six weeks.

WTI and Brent had hit two-week lows on Wednesday after China proposed a broad range of tariffs on USA exports, feeding fears of a trade war.

"OPEC's production cuts are working and we are seeing a steady decrease in a global supply glut", Ahn Yea Ha, a commodities analyst at Kiwoom Securities, said by phone. US West Texas Intermediate (WTI) crude for May delivery was down 4c at $63.33 a barrel. The contract rose 50c to $63.51 on Tuesday. Total volume traded was 12 above the 100-day average.

Front-month London Brent crude for June delivery was up 27 cents, or 0.4 percent, at $68.29, having ended down 10 cents. The global benchmark crude traded at a $4.62 premium to June WTI.

The cuts run until the end of the year but leading Opec member Saudi Arabia has said they could be extended in one form or another into 2019.

With the group reaching an unprecedented degree of compliance with its current output target, Venezuela contributed to a further decline in supplies in March.

A day earlier, the American Petroleum Institute surprised traders with a crude oil inventory draw of 3.28 million barrels, versus analyst expectations of a modest build.

The Energy Information Administration said gasoline inventories had also fallen by 1.1 million barrels to 238.5 million barrels, while distillates gained 500,000 barrels at 129.5 million barrels.

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