Oil prices move higher on U.S. supply drain

July 25 (UPI) -- Crude oil prices were edging higher before the start of U.S. trading on Wednesday on data showing a drain in supplies, though trade issues could mute the rally.

The American Petroleum Institute reported after the close of trading on Tuesday that domestic crude oil inventories in the United States dropped 3.16 million barrels. In a possible sign of strong consumer demand, gasoline inventories declined 4.87 million barrels last week.

"What really is driving oil higher today is just good old fashion supply and demand," Phil Flynn of the PRICES Futures Group in Chicago said in a morning market newsletter.

Official U.S. data are released at 10:30 a.m. EDT by the Energy Information Administration. API last week reported a build in U.S. oil inventories of 629,000 barrels for the week ending July 13 and the EIA later reported inventories increased by nearly 6 million barrels.

API figures were supporting crude oil prices ahead of the opening bell. The price for Brent crude oil, the global benchmark, was up 0.57 percent as of 9:19 a.m. EDT to $73.86 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.36 percent to $68.77 per barrel.

The EIA data release will influence the market's direction. A larger draw than API reported would send oil prices higher, while a surplus would send them lower.

Later on Wednesday, U.S. President Donald Trump meets with European Commission President Jean-Claude Juncker to discuss trade relationships. Ahead of the meeting, Trump said he wanted both sides to drop all tariffs, trade barriers and subsidies.

"That would finally be called free market and fair trade," he stated through his official Twitter account. "Hope they do it, we are ready, but they won't!"

Trump has frustrated many trade allies with stiff tariffs of his own, particularly on aluminum, automotive and steel. European leaders have enacted safeguards on metals in anticipation of a shift in trade flows.

"Any sign that Trump and Juncker can lay the groundwork for a trade deal could set oil, distillate, grains and metals on a tear," Flynn added.

Trade tensions have created headwinds for commodity prices historically.