Wires

UPDATE 2-Oil rebounds on fresh hopes for U.S.-China trade deal

Jane Chung

* Brent futures up 0.5%, WTI up 0.7%

* China says some tariffs must be cancelled on both sides

* U.S. crude inventories up by 7.9 mln bbls last week - EIA (Adds China's commerce ministry comments, updates prices)

SEOUL, Nov 7 (Reuters) - Oil prices rose on Thursday amid new hints from China on progress towards a trade deal with the United States, offsetting downward pressure from a huge increase in U.S. crude stockpiles.

Brent crude futures were up 33 cents, or 0.5% at $62.07 a barrel by 0812 GMT after settling down $1.22 per barrel, or almost 2% on Wednesday.

West Texas Intermediate crude futures rose 37 cents, or 0.7%, from their last close to $56.72 a barrel. They settled 88 cents lower, or 1.54%, in the previous session.

China's commerce ministry said on Thursday that while Beijing and Washington still have to agree to simultaneously cancel some existing tariffs on each other's goods for both sides to reach a 'Phase One' trade deal, they have agreed to cancel additional tariffs in different phases.

That provided a welcome boost to market sentiment after news that U.S. crude oil stockpiles rose 7.9 million barrels last week as refiners cut output and exports fell. That number trounced analysts' expectations for an increase of 1.5 million barrels, the Energy Information Administration (EIA) said on Wednesday.

Gasoline and distillate inventories dropped 2.8 million barrels and by 622,000 barrels respectively.

"The inventory builds and drops in exports are likely related to the COSCO sanctions," said Stephen Innes, market strategist at AxiTraders, referring to the Chinese tanker firm the United States sanctioned, among others, in late September for alleged involvement in moving crude oil from Iran.

U.S. crude exports fell nearly 1 million barrels last week to 2.4 million barrels per day.

Beyond U.S. inventories, questions over a thaw in U.S.-China trade tensions will remain a key market driver.

While Beijing's statement on Thursday was viewed positively, a senior official of U.S. President Donald Trump's administration told Reuters on Wednesday that a meeting between Trump and Chinese President Xi Jinping to sign an interim deal could be delayed until December as talks continue over terms and venue.

It was still possible the Phase One agreement aimed at ending a damaging trade war would not be reached, but a deal was more likely than not, the official said on condition of anonymity. (Reporting by Jane Chung; Editing by Shri Navaratnam and Kenneth Maxwell)