LONDON (Reuters) -Oil prices edged up on Thursday on signs of easing trade tensions, stronger than expected economic data from the world's top oil consumers and renewed risks in the Middle East.

Brent crude futures were up 17 cents, or around 0.3%, to $68.67 a barrel at 0856 GMT. U.S. West Texas Intermediate crude futures were up 31 cents, or 0.5%, at $66.69.

"Oil thinking has been distracted from the Middle East, and the reminders of Israel's attacks into Syria and the drone attacks on oil infrastructure in Kurdistan are timely and once again add a little fizz to proceedings," said John Evans, analyst at PVM Oil Associates.

"Any other incident that deprives the market of barrels will be added to the low inventory narrative and we expect prices to continue to hold with any risk being to the upside."

Drone attacks on oilfields in Iraq's semi-autonomous Kurdistan region have slashed crude output by up to 150,000 barrels per day, two energy officials said on Wednesday, as infrastructure damage forced multiple shutdowns.

Meanwhile, U.S. President Donald Trump has said letters notifying smaller countries of their U.S. tariff rates would go out soon, which along with his renewed optimism about prospects of a deal with Beijing on illicit drugs and an agreement possible with Europe helped calm investors.

"Trump softened tones on China and proposed lower tariff rates on smaller countries, which are seen as positive developments in the global trade outlooks," said independent analyst Tina Teng.

"China's better-than-expected economic data and the U.S.'s larger-than-expected oil inventory draw have both been bullish factors for oil prices."

U.S. crude inventories fell more than expected by 3.9 million barrels to 422.2 million barrels last week, the Energy Information Administration said on Wednesday, suggesting stronger refinery activity, tighter supply, and increased demand. [EIA/S]

However, larger than expected builds in gasoline and diesel inventories capped price gains, raising concerns of weakening demand from summer travel, ANZ analysts said in a note on Thursday.

Data showed that China's June crude oil throughput was up 8.5% from a year ago, implying stronger fuel demand.