* U.S. crude inventories dropped more than expected in week
-EIA
* China, U.S. to hold trade talks in October
* OPEC-led supply cuts support, but output rises in August
(New throughout, updates prices, market activity and comments,
adds U.S. weekly energy data; new byline, changes dateline,
previous LONDON)
By Laila Kearney
NEW YORK, Sept 5 (Reuters) - Oil prices surged more than 2%
on Thursday on a sharp decrease in U.S. crude inventories and as
hopes of progress in resolving the U.S.-China trade feud boosted
investor sentiment.
Global benchmark Brent crude gained $1.43, or 2.4%, to
$62.13 a barrel by 11:12 a.m. EDT (1512 GMT). U.S. West Texas
Intermediate (WTI) crude added $1.18, or 2.1%, to $57.44 a
barrel.
U.S. crude, along with gasoline and distillate inventories,
fell last week. Crude stocks dropped 4.8 million barrels, which
was more than the 2.5 million barrel draw analysts had expected,
the Energy Information Administration said.
Net U.S. crude imports, however, rose last week by 934,000
barrels per day.
"We ripped higher - it's definitely a bullish report all
around," said Bob Yawger, director of energy futures at Mizuho
in New York. "A big import number would usually be bearish, but
it didn't seem to dent the bullish end to the equation."
The volume of U.S. crude oil in storage should decrease in
coming weeks before reversing course with the end of peak
driving season and the start of significant refinery maintenance
work, said Andrew Lipow, president at Lipow Oil Associates in
Houston.
Crude prices had gained more than 4% on Wednesday as
positive Chinese economic data sparked a wider market rally. On
Thursday, China said Beijing and Washington had agreed to hold
high-level trade talks in early October.
"The upswing itself is likely to have sparked further
follow-up buying," said Eugen Weinberg of Commerzbank, who added
the planned U.S.-China trade talks were among factors boosting
investor risk appetite.
The prolonged U.S.-China trade dispute has been a dampener
on oil prices but Brent is still up about 12% this year, helped
by production cuts led by the Organization of the Petroleum
Exporting Countries (OPEC) and its allies, including Russia.
Nonetheless, both OPEC and Russia boosted production in
August, according to a Reuters survey and Russian energy
ministry figures, weighing on prices.
Also putting downward pressure on prices has been mounting
evidence of slowing economic growth worldwide, which has
prompted analysts to lower forecasts for oil demand growth.
BP Chief Financial Officer Brian Gilvary told Reuters
on Wednesday that global oil demand was expected to grow by less
than 1 million barrels per day in 2019, a slowdown from previous
years.
(Additional reporting by Alex Lawler and Aaron Sheldrick,
Jessica Resnick-Ault and Scott DiSavino in New York; Editing by
David Evans, Mark Potter and David Gregorio)